Public Finance Alert: SEC Proposal May Require Municipal Entity Board Members and Conduit Borrower Board Members and Financial Officers to Register as Municipal Advisors
1/3/2011
On December 20, 2010, the Securities and Exchange Commission (SEC) released proposed rules (the “Proposed Rules”) that would require appointed board members of a municipal bond issuer or other municipal entity that invests governmental funds to register as municipal advisors with the SEC and the Municipal Securities Rulemaking Board (MSRB) if they provide “advice” to the municipal entity as to the issuance of municipal securities, swap transactions, and/or investment strategy relating to state or municipal funds. Although not expressly addressed by the SEC’s release, it appears that board members and even employees of conduit borrowers from municipal issuers also would need to register if they provide “advice” to such borrowers relating to the issuance of municipal securities, swap transactions, and/or investment strategy relating to municipal bond proceeds. The Proposed Rules do not address what constitutes “advice.”
