I 

112TH CONGRESS 

1ST SESSION H. R. 2827 

To amend the Securities Exchange Act of 1934 to clarify provisions relating 

to the regulation of municipal advisors, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

AUGUST 26, 2011 

Mr. DOLD introduced the following bill; which was referred to the Committee 

on Financial Services 

A BILL 

To amend the Securities Exchange Act of 1934 to clarify 

provisions relating to the regulation of municipal advisors, and for other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. DEFINITION OF MUNICIPAL ADVISOR. 

4 Section 15B(e)(4) of the Securities Exchange Act of 

5 1934 is amended to read as follows: 

6 ‘‘(4) the term ‘municipal advisor’— 

7 ‘‘(A) means a person (who is not a munic8 ipal entity or an employee of a municipal enti9 ty) that— 

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1 ‘‘(i) is formally engaged, in writing 

2 and for compensation, by a municipal enti3 ty to provide advice to a municipal entity 

4 with respect to municipal financial prod5 ucts or the issuance of municipal securi6 ties, including advice with respect to the 

7 structure, timing, terms, and other similar 

8 matters concerning such financial products 

9 or issues; or 

10 ‘‘(ii) undertakes a solicitation of a 

11 municipal entity for such purpose; 

12 ‘‘(B) includes financial advisors, guaran13 teed investment contract brokers, third-party 

14 marketers, placement agents, solicitors, finders, 

15 and swap advisors, if such persons are de16 scribed in either of clauses (i) or (ii) of sub17 paragraph (A); and 

18 ‘‘(C) does not include— 

19 ‘‘(i) any broker, dealer, or municipal 

20 securities dealer (or person associated with 

21 such broker, dealer or municipal securities 

22 dealer); 

23 ‘‘(ii) any investment adviser registered 

24 under the Investment Advisers Act of 1940 

25 or with a State or territory of the United 

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1 States (or person associated with such an 

2 investment adviser); 

3 ‘‘(iii) any commodity trading advisor, 

4 swap dealer, major swap participant, fu5 tures commission merchant or introducing 

6 broker registered under the Commodity 

7 Exchange Act (or person associated with a 

8 commodity trading advisor, swap dealer, 

9 major swap participant, futures commis10 sion merchant or introducing broker) who 

11 is providing advice related to, engaging in, 

12 or arranging any swap; 

13 ‘‘(iv) any security-based swap dealer 

14 or major security-based swap participant 

15 registered under the Securities Exchange 

16 Act of 1934 (or any person associated with 

17 a security-based swap dealer or major se18 curity-based swap participant) who is pro19 viding advice related to, engaging in, or ar20 ranging any security-based swap; 

21 ‘‘(v) any attorney offering legal advice 

22 or providing services that are of a tradi23 tional legal nature; 

24 ‘‘(vi) any engineer providing engineer25 ing advice; 

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1 ‘‘(vii) any financial institution or per2 son associated with a financial institution; 

3 or 

4 ‘‘(viii) any elected or appointed mem5 ber of a governing body of a municipal en6 tity, with respect to such member’s role on 

7 the governing body;’’. 

8 SEC. 2. DEFINITION OF INVESTMENT STRATEGIES. 

9 Section 15B(e)(3) of the Securities Exchange Act of 

10 1934 is amended to read as follows: 

11 ‘‘(3) the term ‘investment strategies’— 

12 ‘‘(A) means plans or programs for the in13 vestment of the proceeds of municipal securities 

14 (but not other public funds) that are not munic15 ipal derivatives or guaranteed investment con16 tracts, and the recommendation of and broker17 age of municipal escrow investments, where, 

18 with respect to the municipal advisor offering 

19 such plans, programs, or recommendations, 

20 such proceeds of municipal securities and mu21 nicipal escrow investments— 

22 ‘‘(i) are known to the municipal advi23 sor to be comprised of funds or invest24 ments maintained in a segregated account 

25 that is exclusively for the purpose of mainmstockstill on DSK4VPTVN1PROD with BILLS

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1 taining such proceeds or escrow invest2 ment; or 

3 ‘‘(ii) have been identified to the mu4 nicipal advisor, in writing, as funds or in5 vestments that constitute the proceeds of 

6 municipal securities or municipal escrow 

7 investments; and 

8 ‘‘(B) does not include— 

9 ‘‘(i) merely acting as a broker or prin10 cipal with respect to the purchase or sale 

11 of a security or other instrument; 

12 ‘‘(ii) providing a list of, or price 

13 quotations for, investment options or secu14 rities or other instruments which may be 

15 available for purchase or investment or 

16 which satisfy investment criteria specified 

17 by a municipal entity; 

18 ‘‘(iii) acting as a custodian; 

19 ‘‘(iv) providing generalized informa20 tion concerning investments which are not 

21 tailored to the specific investment objec22 tives of the municipal entity; or 

23 ‘‘(v) providing advice with respect to 

24 matters other than the investment of funds 

25 or financial products;’’. 

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1 SEC. 3. DEFINITION OF SOLICITATION OF A MUNICIPAL EN2 TITY. 

3 Section 15B(e)(9) of the Securities Exchange Act of 

4 1934 is amended by inserting before the semicolon the fol5 lowing ‘‘, but where communications on behalf of a fund 

6 or other collective investment vehicle shall not be deemed 

7 to be on behalf of any investment adviser that advises or 

8 manages such fund or investment vehicle’’. 

9 SEC. 4. ELIMINATION OF FEDERAL FIDUCIARY STANDARD 

10 FOR MUNICIPAL ADVISORS. 

11 Section 15B(c)(1) of the Securities Exchange Act of 

12 1934 is amended by striking the second sentence and in13 serting the following: 

14 ‘‘No municipal advisor may engage in any act, prac15 tice, or course of business that is in contravention of 

16 any rule of the Board. In issuing regulations to 

17 carry out this paragraph, the Board shall— 

18 ‘‘(A) limit the duties of municipal advisors 

19 in relation to municipal entities to those specific 

20 activities involving such municipal entity de21 scribed under the definition of municipal advi22 sor in subsection (e)(4); 

23 ‘‘(B) specify when such duties begin and 

24 terminate in relation to such activities; and 

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1 ‘‘(C) not prohibit principal transactions by 

2 municipal advisors.’’. 

Æ 

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