Some municipal advisers and their counsel believe that the SEC's temporary rule requiring municipal advisers to register (Rule 15Ba2-6T under the Securities Exchange Act of 1934) lacks clarity and needs to be amended. The temporary rule is effective until December 30, 2011 or until the SEC completes a final rule. By October 1, 2010, municipal advisers are required to register as investment advisers with the SEC. The temporary rule was promulgated by the SEC in response to Section 975 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring registration of such advisers. In addition, the statute states that such advisers have a fiduciary duty to the municipalities they advise.
Much of the criticism of the temporary rule and the statute itself stems from the lack of clarity about who is included within the definition of a “municipal adviser.” In addition, it is not clear to some as to what constitutes the type of municipal financial products or the type of advice covered within the definition. Certain exclusions from registration are available for, among others, underwriters and certain commodity advisers.
An SEC spokesperson, in an informal response to such criticism, has stated that the SEC will apply a common-sense approach when applying the rule. It is hoped that the final SEC rule will serve to provide clarity as to the scope of the registration requirements.