,,ii  #aafth ,,congress  #ast ,session  
,s4 #abcf  ,,in ,,the ,,senate ,,of     
,,the ,,united ,,states  ,april #cj1    
#bjai,mr4 ,kennedy introduced the       
following bill2 which was read twice and
 referred to the ,committee on ,banking1
 ,housing1 and ,urban ,affairs  ,a      
,,bill  ,to amend the ,securities       
,exchange ,act of #aicd to clarify the  
composition of the membership of the    
,municipal ,securities ,rulemaking      
,board1 and for other purposes4  #a4    
,short title ,this ,act may be cited as 
the ,municipal ,securities ,rulemaking  
,board ,reform ,act of #bjai4  #b4 ,the 
,municipal ,securities ,rulemaking      
,board  7a7 ,in general ,section #ae;,b 
of the ,securities ,exchange ,act of    
#aicd 7#ae ,u4,s4,c4 #gho-#d7 is        
amended-- 7#a7 by striking subsection   
7b7 and inserting the following3  7b7   
,municipal ,securities ,rulemaking      
,board  7#a7 ,membership  7,a7          
,definitions ,for the purposes of this  
paragraph1 a person is associated with--

 7i7 a municipal securities broker if   
that person is--  7,i7 a partner1       
officer1 director1 or branch manager of 
a municipal securities broker2  7,,ii7 a
 person occupying a similar status as1  
or performing similar functions as1 a   
person described in subclause 7,i72     
7,,iii7 any other employee of a         
municipal securities broker who is      
engaged in the management1 direction1   
supervision1 or performance of any      
activities relating to the business of  
effecting transactions in municipal     
securities for the account of others2 or
  7,,iv7 a person directly or indirectly
 controlling1 controlled by1 or under   
common control with a municipal         
securities broker2  7ii7 a municipal    
securities dealer if the person is a    
person associated with a municipal      
securities dealer2 and  7iii7 a         
municipal advisor if the person is a    
person associated with a municipal      
advisor4  7,b7 ,composition of ,board   
7i7 ,in general ,the ,municipal         

,securities ,rulemaking ,board 7referred
 to in this section as the ,board7 shall
 be composed of #ae members1 or such    
other number of members as specified by 
the ,commission under clause 7ii71 who  
shall be--  7,i7 appointed from among   
prominent individuals of integrity and  
reputation2 and  7,,ii7 knowledgeable of
 matters relating to the municipal      
securities markets4  7ii7 ,commission   
alterations ,the ,commission may alter  
the number of members that constitute   
the ,board if that number is an odd     
number4  7,c7 ,public representatives   
and regulated representatives  7i7      
,public representatives ,a majority of  
the membership of the ,board shall be   
individuals who were not associated with
 a municipal securities broker1         
municipal securities dealer1 or         
municipal advisor during the #e-year    
period preceding the date on which those
 individuals are appointed to the ,board
 7referred to in this subsection as     
public representatives7--  7,i7 not less

 than #a of whom shall be representative
 of institutional or retain investors in
 municipal securities2  7,,ii7 not less 
than #a of whom shall be representative 
of municipal entities2 and  7,,iii7 not 
less than #a of whom shall be a member  
of the public with knowledge or         
experience in the municipal industry4   
7ii7 ,regulated representatives ,other  
than public representatives1 the members
 of the ,board shall be individuals who 
are associated with a broker1 dealer1   
municipal securities dealer1 or         
municipal advisor 7referred to in this  
subsection as regulated                 
representatives7--  7,i7 not less than  
#a of whom shall be associated with and 
representative of brokers1 dealers1 or  
municipal securities dealers that are   
not banks or subsidiaries1 departments1 
or divisions of banks 7referred to in   
this subsection as broker-dealer        
representatives72  7,,ii7 not less than 
#a of whom shall be associated with and 
representative of municipal securities  

dealers that are banks or subsidiaries1 
departments1 or divisions of banks      
7referred to in this subsection as bank 
representatives72 and  7,,iii7 not less 
than #a of whom shall be associated with
 a municipal advisor 7referred to in    
this subsection as advisor              
representatives74  7,d7 ,limitation ,the
 membership of the ,board shall1 at all 
times1 be as evenly divided as possible 
between the number of public            
representatives and regulated           
representatives1 taking into account the
 requirement under subparagraph 7,c77i7 
that the majority of the membership of  
the ,board shall be public              
representatives4  7,e7 ,appointment of  
,board members  7i7 ,initial ,board ,not
 later than #ahj days after the date of 
enactment of the ,municipal ,securities 
,rulemaking ,board ,reform ,act of      
#bjai1 the ,commission shall1 subject to
 clause 7ii7-- 7,i7 appoint a           
,chairperson of the ,board and all other
 initial members of the ,board2 and     

7,,ii7 designate a term of service for  
each member appointed under subclause   
7,i74  7ii7 ,interim ,board  7,i7 ,in   
general ,before appointing the initial  
members of the ,board under clause 7i71 
the ,commission may1 without regard to  
the limitations in subparagraph 7,c71   
appoint not more than #c individuals to 
serve as interim members of the ,board  
who shall be responsible for ensuring   
the continuity of the operations of the 
,board until the ,commission appoints   
those initial members4  7,,ii7          
,membership ,in making an appointment   
under subclause 7,i71 the ,commission   
shall select from among individuals of  
integrity and reputation and who are    
knowledgeable of matters relating to the
 municipal securities markets4  7,,iii7 
,authority ,the members of the interim  
,board appointed under this subparagraph
 may exercise all of the authority of   
the ,board under this section4  7,f7    
,vacancies ,a vacancy on the ,board--   
7i7 shall not affect the authority of   

the ,board under this section2 and  7ii7
 shall be filled by the ,commission4    
7,g7 ,term of service ,the term of      
service for each ,board member shall be 
#c years1 plus the amount of time       
necessary for the appointment of a      
successor1 except that--  7i7 the term  
of service for a member appointed under 
subparagraph 7,e77i71 other than the    
,chairperson of the ,board1 shall expire
 in increments1 with--  7,i7 #a_/c of   
the terms of the members so appointed   
expiring on the date that is #a year    
after the date on which those members   
are appointed2  7,,ii7 #a_/c of the     
terms of the members so appointed       
expiring on the date that is #b years   
after the date on which those members   
are appointed2 and  7,,iii7 #a_/c of the
 terms of the members so appointed      
expiring on the date that is #c years   
after the date on which those members   
are appointed2  7ii7 the term of service
 for a member appointed under           
subparagraph 7,e77ii7 shall be not more 

than #ahj days2 and  7iii7 any ,board   
member appointed to fill a vacancy on   
the ,board before the expiration of the 
term with respect to that vacancy shall 
be appointed only for the remainder of  
that term4  7,h7 ,removal ,a member of  
the ,board shall be removable at will by
 the ,commission4  7#b7 ,rules ,the     
,board shall propose and adopt rules to 
effect the purposes of this title with  
respect to transactions in municipal    
securities effected by brokers1 dealers1
 and municipal securities dealers and   
advice provided to or on behalf of      
municipal entities or obligated persons 
by brokers1 dealers1 municipal          
securities dealers1 and municipal       
advisors with respect to municipal      
financial products1 the issuance of     
municipal securities1 and solicitations 
of municipal entities or obligated      
persons undertaken by brokers1 dealers1 
municipal securities dealers1 and       
municipal advisors and that1 at a       
minimum1 shall--  7,a7 provide that no  

municipal securities broker or municipal
 securities dealer shall effect any     
transaction in1 or induce or attempt to 
induce the purchase or sale of1 any     
municipal security1 and no broker1      
dealer1 municipal securities dealer1 or 
municipal advisor shall provide advice  
to or on behalf of a municipal entity or
 obligated person with respect to       
municipal financial products or the     
issuance of municipal securities1 unless
 such municipal securities broker or    
municipal securities dealer meets such  
standards of operational capability and 
such municipal securities broker or     
municipal securities dealer and every   
natural person associated with such     
municipal securities broker or municipal
 securities dealer meets such standards 
of training1 experience1 competence1 and
 such other qualifications as the ,board
 finds necessary or appropriate in the  
public interest or for the protection of
 investors and municipal entities or    
obligated persons4 ,in connection with  

the definition and application of such  
standards the ,board may--  7i7         
appropriately classify municipal        
securities brokers1 municipal securities
 dealers1 and municipal advisors 7taking
 into account relevant matters1         
including types of business done1 nature
 of securities other than municipal     
securities sold1 and character of       
business organization71 and persons     
associated with municipal securities    
brokers1 municipal securities dealers1  
and municipal advisors2  7ii7 specify   
that all or any portion of such         
standards shall be applicable to any    
such class2 and  7iii7 require persons  
in any such class to pass tests         
administered in accordance with         
subsection 7c77#g72  7,b7 be designed to
 prevent fraudulent and manipulative    
acts and practices1 to promote just and 
equitable principles of trade1 to foster
 cooperation and coordination with      
persons engaged in regulating1 clearing1
 settling1 processing information with  

respect to1 and facilitating            
transactions in municipal securities and
 municipal financial products1 to remove
 impediments to and perfect the         
mechanism of a free and open market in  
municipal securities and municipal      
financial products1 and1 in general1 to 
protect investors1 municipal entities1  
obligated persons1 and the public       
interest2 and not be designed to permit 
unfair discrimination among customers1  
municipal entities1 obligated persons1  
municipal securities brokers1 municipal 
securities dealers1 or municipal        
advisors1 to fix minimum profits1 to    
impose any schedule or fix rates of     
commissions1 allowances1 discounts1 or  
other fees to be charged by municipal   
securities brokers1 municipal securities
 dealers1 or municipal advisors1 to     
regulate by virtue of any authority     
conferred by this title matters not     
related to the purpose of this title or 
the administration of the ,board1 or to 
impose any burden on competition not    

necessary or appropriate in furtherance 
of the purposes of this title2  7,c7 if 
the ,board deems appropriate1 provide   
for the arbitration of claims1 disputes1
 and controversies relating to          
transactions in municipal securities and
 advice concerning municipal financial  
products1 except that no person other   
than a municipal securities broker1     
municipal securities dealer1 municipal  
advisor1 or person associated with such 
a municipal securities broker1 municipal
 securities dealer1 or municipal advisor
 may be compelled to submit to such     
arbitration except at his instance and  
in accordance with section #bi2  7,d7   
provide for the periodic examination in 
accordance with subsection 7c77#g7 of   
municipal securities brokers1 municipal 
securities dealers1 and municipal       
advisors to determine compliance with   
applicable provisions of this title1 the
 rules and regulations thereunder1 and  
the rules of the ,board4 ,such rules    
shall specify the minimum scope and     

frequency of such examinations and shall
 be designed to avoid unnecessary       
regulatory duplication or undue         
regulatory burdens for any such         
municipal securities broker1 municipal  
securities dealer1 or municipal advisor2
  7,e7 include provisions governing the 
form and content of quotations relating 
to municipal securities which may be    
distributed or published by any         
municipal securities broker1 municipal  
securities dealer1 or person associated 
with such a municipal securities broker 
or municipal securities dealer1 and the 
persons to whom such quotations may be  
supplied4 ,such rules relating to       
quotations shall be designed to produce 
fair and informative quotations1 to     
prevent fictitious or misleading        
quotations1 and to promote orderly      
procedures for collecting1 distributing1
 and publishing quotations2  7,f7       
prescribe records to be made and kept by
 municipal securities brokers1 municipal
 securities dealers1 and municipal      

advisors and the periods for which such 
records shall be preserved2  7,g7 define
 the term separately identifiable       
department or division1 as that term is 
used in section #c7;a77#cj71 in         
accordance with specified and           
appropriate standards to assure that a  
bank is not deemed to be engaged in the 
business of buying and selling municipal
 securities through a separately        
identifiable department or division     
unless such department or division is   
organized and administered so as to     
permit independent examination and      
enforcement of applicable provisions of 
this title1 the rules and regulations   
thereunder1 and the rules of the ,board 
and so that a separately identifiable   
department or division of a bank may be 
engaged in activities other than those  
relating to municipal securities2  7,h7 
provide for the operation and           
administration of the ,board1 the       
compensation of the members of the      
,board 7subject to the rule issued by   

the ,commission under section           
#b7;b77#a77;,b7 of the ,municipal       
,securities ,rulemaking ,board ,reform  
,act of #bjai71 and the appointment and 
compensation of such employees1         
attorneys1 and consultants as may be    
necessary or appropriate to carry out   
the functions of the ,board under this  
section2  7,i7 provide that each        
municipal securities broker1 municipal  
securities dealer1 and municipal advisor
 shall pay to the ,board such reasonable
 fees and charges as may be necessary or
 appropriate to defray the costs and    
expenses of operating and administering 
the ,board1 which shall specify the     
amount of such fees and charges1 which  
may include charges for failure to      
submit to the ,board1 or to any         
information system operated by the      
,board1 within the prescribed           
timeframes1 any items of information or 
documents required to be submitted under
 any rule issued by the ,board2  7,j7   
establish the terms and conditions under

 which any broker1 dealer1 or municipal 
securities dealer may sell1 or prohibit 
any broker1 dealer1 or municipal        
securities dealer from selling1 any part
 of a new issue of municipal securities 
to a related account of a broker1       
dealer1 or municipal securities dealer  
during the underwriting period2 and     
7,k7 with respect to municipal          
advisors-- 7i7 prescribe means          
reasonably designed to prevent acts1    
practices1 and courses of business as   
are not consistent with a municipal     
advisor's fiduciary duty to its clients2
  7ii7 provide continuing education     
requirements for municipal advisors2    
7iii7 provide professional standards2   
and  7iv7 not impose a regulatory burden
 on small municipal advisors that is not
 necessary or appropriate in the public 
interest and for the protection of      
investors1 municipal entities1 and      
obligated persons1 provided that there  
is robust protection of investors       
against fraud4  7#c7 ,board authority   

,the ,board1 in conjunction with or on  
behalf of any ,federal financial        
regulator or self-regulatory            
organization1 may--  7,a7 establish     
information systems2 and  7,b7 assess   
such reasonable fees and charges for the
 submission of information to1 or the   
receipt of information from1 such       
systems from any persons which systems  
may be developed for the purposes of    
serving as a repository of information  
from municipal market participants or   
otherwise in furtherance of the purposes
 of the ,board1 a ,federal financial    
regulator1 or a self-regulatory         
organization1 except that the ,board--  
7i7 may not charge a fee to municipal   
entities or obligated persons to submit 
documents or other information to the   
,board or charge a fee to any person to 
obtain1 directly from the ,internet site
 of the ,board1 documents or information
 submitted by municipal entities1       
obligated persons1 brokers1 dealers1    
municipal securities dealers1 or        

municipal advisors1 including documents 
submitted under the rules of the ,board 
or the ,commission2 and  7ii7 shall not 
be prohibited from charging commercially
 reasonable fees for automated          
subscription-based feeds or similar     
services1 or for charging for other data
 or document-based services customized  
upon request of any person1 made        
available to commercial enterprises1    
municipal securities market             
professionals1 or the general public1   
whether delivered through the ,internet 
or any other means1 that contain all or 
part of the documents or information1   
subject to approval of the fees by the  
,commission under section #ai7;b74  7#d7
 ,guidance ,the ,board may provide      
guidance and assistance in the          
enforcement of1 and examination for1    
compliance with the rules of the ,board 
to the ,commission1 a registered        
securities association under section    
#ae;,a1 or any other appropriate        
regulatory agency1 as applicable4  7#e7 

,meetings ,the ,board1 the ,commission1 
and a registered securities association 
under section #ae;,a1 or the designees  
of the ,board1 the ,commission1 or such 
association1 shall meet not less        
frequently than #b times a year--  7,a7 
to describe the work of the ,board1 the 
,commission1 and the registered         
securities association involving the    
regulation of municipal securities2 and 
7,b7 to share information about-- 7i7   
the interpretation of the ,board1 the   
,commission1 and the registered         
securities association of ,board rules2 
and  7ii7 examination and enforcement of
 compliance with ,board rules4  7#f7    
,rule of construction ,nothing in this  
section shall be construed to impair or 
limit the power of the ,commission under
 this title4  2 and  7#b7 in subsection 
7c77#g7-- 7,a7 in subparagraph 7,a71 in 
the matter preceding clause 7i71 by     
striking 7b77#b77;,e7 and inserting     
7b77#b77;,d72 and  7,b7 in subparagraph 
7,b71 in the first sentence1 by striking

 7b77#b77;,e7 and inserting             
7b77#b77;,d74  7b7 ,rulemakings  7#a7   
,securities and ,exchange ,commission   
,the ,securities and ,exchange          
,commission--  7,a7 may issue any rules 
to carry out this ,act that may be      
necessary or appropriate in the public  
interest or for the protection of       
investors2 and  7,b7 shall issue a final
 rule that provides the maximum         
compensation for a member of the        
,municipal ,securities ,rulemaking      
,board4  7#b7 ,municipal ,securities    
,rulemaking ,board ,not later than #fj  
days after the date on which the        
,securities and ,exchange ,commission   
has completed the appointment of the    
initial members of the ,municipal       
,securities ,rulemaking ,board under    
section #ae;,b7b77#a77;,e7 of the       
,securities ,exchange ,act of #aicd1 as 
added by subsection 7a71 the ,municipal 
,securities ,rulemaking ,board shall    
submit to the ,commission any notice of 
a proposed change to the rules of the   

,board that is required as a result of  
the amendments made by subsection 7a74