,i #aacth ,,congress #ast ,session ,h4 ,r4 #gig ,,in ,,the ,,house ,,of ,,representatives ,february #ae1 #bjac ,mr4 ,stivers 7for himself1 ,ms4 ,moore1 and ,mr4 ,pearce7 introduced the following bill2 which was referred to the ,committee on ,financial ,services ,a ,,bill ,to amend the ,securities ,exchange ,act of #aicd to clarify provisions relating to the regulation of municipal advisors1 and for other purposes4 #a4 ,short title ,this ,act may be cited as the ,municipal ,advisor ,oversight ,improvement ,act of #bjac4 #b4 ,registration of municipal securities dealers ,section #ae;,b7a77#a77;,b7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;a77#a77;,b77 is amended by striking or on behalf of4 #c4 ,municipal ,securities ,rulemaking ,board2 rules and regulations ,section #ae;,b7b77#b77,l7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;b77#b77,l77 is amended-- 7#a7 in clause 7iii71 by striking and at the end2 7#b7 in clause 7iv71 by striking the period and inserting 2 and2 and 7#c7 by adding at the end the following3 7v7 not regulate as a municipal advisor the activities of a person referred to in subparagraph 7,c7 of subsection 7e77#d71 to the extent that such activities are described under such subparagraph4 4 #d4 ,discipline of municipal securities dealers2 censure2 suspension or revocation of registration 7a7 ,in general ,section #ae;,b7c77#a7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;c77#a77 is amended to read as follows3 7#a7 ,no broker1 dealer1 or municipal securities dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in1 or to induce or attempt to induce the purchase or sale of1 any municipal security1 and no broker1 dealer1 municipal securities dealer1 or municipal advisor shall make use of the mails or any means or instrumentality of interstate commerce to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products1 the issuance of municipal securities1 or to undertake a solicitation of a municipal entity or obligated person1 in contravention of any rule of the ,board4 ,a municipal advisor1 when acting pursuant to an engagement described in subsection 7e77#d77;,a77i71 and any person associated with such municipal advisor1 shall be deemed to have a fiduciary duty with respect to such engagement to any municipal entity for whom such municipal advisor acts as a municipal advisor1 and no municipal advisor may engage in any act1 practice1 or course of business which is not consistent with such municipal advisor's fiduciary duty or that is in contravention of any rule of the ,board4 ,in issuing regulations to carry out the previous sentence and subsection 7b77#b77,l77i71 the ,board shall-- 7,a7 require that a municipal advisor act in accordance with its fiduciary duty to its municipal entity clients1 but only in connection with those specific activities involving such municipal entity client described under subsection 7e77#d77;,a77i7 7and not excluded under subsection 7e77#d77;,c772 7,b7 specify when such duties begin and terminate in relation to such activities2 and 7,c7 not prohibit principal transactions by municipal advisors or the receipt of compensation based on commissions or other standard compensation in relation to the purchase or sale of a security or other instrument 7including deposit or foreign exchange71 except that the ,board-- 7i7 may issue rules requiring a municipal advisor to only engage in such transactions or receive such compensation in a manner that is consistent with the municipal advisor's fiduciary duty2 and 7ii7 may prohibit a municipal advisor that has been engaged to provide advice with respect to an underwritten offering of securities from concurrently acting as an underwriter of such offering4 4 7b7 ,technical correction 7#a7 ,in general ,section #ige7;c77#e7 of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act is amended to read as follows3 7#e7 in paragraph 7#d71 by inserting or municipal advisor after municipal securities dealer each place that term appears2 4 7#b7 ,effective date ,the amendment made by paragraph 7#a7 shall take effect on the date of the enactment of the ,dodd-,frank ,wall ,street ,reform and ,consumer ,protection ,act1 as if included in such ,act4 #e4 ,definition of investment strategies ,section #ae;,b7e77#c7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;e77#c77 is amended to read as follows3 7#c7 the term investment strategies-- 7,a7 means plans or programs for the investment of the direct proceeds of municipal securities 7but not other public funds7 that are not municipal derivatives or guaranteed investment contracts1 and the recommendation of and brokerage of municipal escrow investments1 where1 with respect to the municipal advisor offering such plans1 programs1 or recommendations1 such proceeds of municipal securities and municipal escrow investments-- 7i7 are known or should be known to the municipal advisor to be comprised of funds or investments maintained in a segregated account that is exclusively for the purpose of maintaining such proceeds or escrow investment2 or 7ii7 have been identified to the municipal advisor1 in writing1 as funds or investments that constitute the proceeds of municipal securities or municipal escrow investments2 and 7,b7 does not include-- 7i7 merely acting as a broker or principal with respect to the purchase or sale of a security or other instrument 7including deposit or foreign exchange72 7ii7 providing a list of1 or price quotations for1 investment options or securities or other instruments which may be available for purchase or investment or which satisfy investment criteria specified by a municipal entity2 7iii7 acting as a custodian2 7iv7 providing generalized information concerning investments which are not tailored to the specific investment objectives of the municipal entity2 or 7v7 providing advice with respect to matters other than the investment of funds or financial products2 4 #f4 ,definition of municipal advisor ,section #ae;,b7e77#d7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;e77#d77 is amended to read as follows3 7#d7 the term municipal advisor-- 7,a7 means a person 7who is not a municipal entity or obligated person1 or an employee of a municipal entity or obligated person7 that-- 7i7 is engaged1 for compensation1 by a municipal entity or obligated person to provide advice to a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities1 including advice with respect to the structure1 timing1 terms1 and other similar matters concerning such financial products or issues2 or 7ii7 undertakes a solicitation of a municipal entity2 7,b7 includes financial advisors1 guaranteed investment contract brokers1 third-party marketers1 placement agents1 solicitors1 finders1 and swap advisors1 if such persons are described in either of clauses 7i7 or 7ii7 of subparagraph 7,a7 and are not excluded under subparagraph 7,c72 and 7,c7 does not include1 solely as a result of their performing the following activities-- 7i7 any broker1 dealer1 or municipal securities dealer registered with the ,commission1 to the extent that such broker1 dealer1 or municipal securities dealer is serving or is seeking to serve as an underwriter1 placement agent1 remarketing agent1 dealer-manager1 or in a similar capacity1 or is providing advice related to or in connection with any such activities and not for separate compensation1 or any person associated with such a broker1 dealer1 or municipal securities dealer2 7ii7 an investment adviser registered under the ,investment ,advisers ,act of #aidj 7#ae ,u4,s4,c4 #hj;b-#a et seq47 or with any ,state or territory of the ,united ,states that is providing investment advice 7whether or not of a type that would subject a person to registration under such ,act71 or any person associated with such an investment adviser2 7iii7 any person registered under the ,commodity ,exchange ,act 7#g ,u4,s4,c4 #a et seq47 or this ,act in relation to such person's activities with respect to swaps or security-based swaps that is providing advice related to swaps or security-based swaps1 or providing advice that is related to or in connection with any such activities and not for separate compensation1 or any person associated with such person2 7iv7 a financial institution engaging in any of the activities referred to in clause 7i71 7ii71 or 7iii7 pursuant to an exemption from registration1 acting as a dealer or principal with respect to deposits1 foreign exchange1 or identified banking products 7as defined in paragraphs 7#a7 through 7#e7 of section #bjf7;a7 of the ,gramm-,leach-,bliley ,act 7#ae ,u4,s4,c4 #gh;c7a7771 providing other traditional banking or trust services otherwise subject to a fiduciary duty under ,state or ,federal law1 providing administrative or operational services or support1 or providing advice that is related to or in connection with any such activities and not for separate compensation2 7v7 any person subject to regulation by a ,state insurance regulator providing insurance products or services or providing advice that is related to or in connection with any such activities and not for separate compensation2 7vi7 an accountant 7or person associated with such accountant7 providing customary and usual accounting services1 including any attestation or audit service or issuing letters for underwriters for a municipal entity or providing advice that is related to or in connection with any such activities and not for separate compensation2 7vii7 any attorney offering legal advice or providing services that are of a traditional legal nature2 7viii7 an engineer providing engineering advice2 or 7ix7 any elected or appointed member of a governing body of a municipal entity or obligated person1 with respect to such member's role on the governing body2 4 #g4 ,definition of solicitation of a municipal entity or obligated person ,section #ae;,b7e77#i7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;e77#i77 is amended by striking or on behalf of a municipal entity2 and and inserting the following3 a municipal entity1 but communications on behalf of a fund or other collective investment vehicle shall not be deemed to be on behalf of any investment adviser that advises or manages such fund or investment vehicle24 #h4 ,definition of municipal derivative ,section #ae;,b7e7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;e77 is amended-- 7#a7 in paragraph 7#aj71 by striking the period on the end and inserting a semicolon2 and 7#b7 by adding at the end the following3 7#aa7 the term municipal derivative means a swap or security-based swap in which a municipal entity is a counterparty2 and 4 #i4 ,definition of on behalf of ,section #ae;,b7e7 of the ,securities ,exchange ,act of #aicd 7#ae ,u4,s4,c4 #gho-#d7;e771 as amended by section #g1 is further amended by adding at the end the following3 7#ab7 the term to provide advice on behalf of a municipal entity or obligated person means to provide advice to a person that is known to be engaged by a municipal entity or obligated person to provide services to such municipal entity or obligated person in connection with the issuance of municipal securities4 4