Municipal Securities (§§ 975 – 979)
Many state and local governments have been adversely affected by the financial crisis, enabling the SEC to persuade Congress to grant it greater authority over municipal securities. The legislation requires “municipal advisers” to register under section 15B of the Exchange Act, and imposes liability on municipal advisers for fraudulent, deceptive, or manipulative acts or practices. A municipal adviser is any person that undertakes a solicitation of a municipal entity or provides advice to or on behalf of a municipal entity with respect to municipal derivatives, investment strategies, or the issuance of municipal securities. Congress has, however, excluded from that category broker-dealers or municipal securities dealers serving as underwriters, registered investment advisers, registered commodity trading advisers, and professionals providing legal and engineering advice.
Congress has also expanded the authority of the Municipal Securities Rulemaking Board (MSRB) with respect to rulemaking, disciplinary proceedings, and the assessment of fees. Moreover, Congress has established an Office of Municipal Securities within the SEC to administer the SEC’s rules with respect to municipal securities dealers, advisers, investors, and issuers. The Office must coordinate with the MSRB in rulemaking and enforcement actions, and the Director of the Office will report to the SEC Chairman.