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Subject: Registration of Municipal Advisors
Date: September 28, 2010
To: Chief Executive Officers and Compliance Officers of All National Banks, Department and Division Heads, and All Examining Personnel
Description: Dodd–Frank Act Section 975 and SEC Interim Final Temporary Rule
Purpose and Background
Section 975 of the Dodd–Frank Wall Street Reform and Consumer Protection Act (Dodd–Frank Act)1 amended section 15B(a) of the Securities Exchange Act to make it unlawful for municipal securities advisors to provide certain advice to or to solicit municipal entities or certain other persons without registering with the Securities and Exchange Commission (SEC). On September 8, 2010, the SEC issued an interim final temporary rule requiring municipal advisors to register with the SEC by October 1, 2010. Municipal advisors must register by submitting Form MA-T through the SEC’s Web site, www.sec.gov by October 1. To submit Form MA-T, municipal advisors must establish an account and obtain access credentials to the SEC’s Web site. The SEC anticipates that Form MA-T submitters will have access to credentials on the day requested. However, municipal advisors are encouraged to allow ample time to establish an account, obtain access credentials, and submit Form MA-T.
Interim Final Temporary Rule for Registration of Municipal Advisors
The SEC issued an interim final temporary rule requiring municipal advisors to register with the SEC by October 1. Section 975 of the Dodd–Frank Act defines a "municipal advisor" as any person who is not a municipal entity or an employee of a municipal entity that provides advice to or on behalf of a municipal entity, or an obligated person thereof, regarding municipal financial products or the issuance of municipal securities, including advice concerning the structure, timing, terms, and other similar matters. Persons who solicit municipal entities or obligated persons on behalf of certain third parties to obtain or retain a business engagement involving municipal financial products, the issuance of municipal securities, or investment advisory services are also considered "municipal advisors."
Section 975 of the Dodd–Frank Act states that the term “municipal advisor” does not include a municipal securities dealer serving as an underwriter, attorneys offering legal advice or providing services that are of a traditional nature, or engineers providing engineering advice.
"Municipal financial products" are municipal derivatives, guaranteed investment products, and investment strategies. Investment strategies include plans and programs for the investment of the proceeds of municipal securities and recommendations and brokerage of municipal escrow investments.
Next Steps for Bankers
National banks should analyze the application of these rules to their operations. National banks meeting the definition of municipal advisor must file Form MA-T with the SEC by October 1.
For further information, please contact Judith Foster, Risk Specialist, Credit and Market Risk, at (202) 874-7450 or Yuna Peng, Senior Attorney, Securities and Corporate Practices, at (202) 874-4701.
Timothy W. Long