On September 13, 2013, the Securities and Exchange Commission ("SEC") adopted final rules for Municipal Advisor registration. The final rules are intended to implement certain provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act adopted by Congress in 2010. The final rules define the term "Municipal Advisor" and provide that if a person or firm fits within this definition, they must register with the SEC as a Municipal Advisor, and they owe a fiduciary duty to their bond issuer client. Under this definition, some activities of underwriters and others will be considered Municipal Advisor activities, unless certain exceptions apply.
On January 10, 2014, the SEC's Office of Municipal Securities provided general interpretive guidance on certain aspects of the final rules. This guidance took the form of responses by SEC staff to certain frequently asked questions. Although the responses do not constitute official SEC policy, they are very informative as to the SEC staff's position on certain issues. The questions and responses may be reviewed here.
The final rules were to become effective on January 13, 2014. On that date, however, the SEC announced that the effective date of the final rules will be delayed until July 1, 2014. The SEC took this action to give market participants additional time to analyze, implement, and comply with the final rules. We expect that the delay of the effective date will allow issuers, underwriters, financial advisors and bond counsel to better prepare for this new regulatory environment.