IIB 
112TH CONGRESS 
2D SESSION 
H. R. 2827 
IN THE SENATE OF THE UNITED STATES 
SEPTEMBER 20, 2012 
Received; read twice and referred to the Committee on Banking, Housing, and 
Urban Affairs 
AN ACT 
To amend the Securities Exchange Act of 1934 to clarify 
provisions relating to the regulation of municipal advi-
sors, and for other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
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SECTION 1. REGISTRATION OF MUNICIPAL SECURITIES 
DEALERS. 
Section 15B(a)(1)(B) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78o–4(a)(1)(B)) is amended by strik-
ing ‘‘or on behalf of’’. 
SEC. 2. MUNICIPAL SECURITIES RULEMAKING BOARD; 
RULES AND REGULATIONS. 
Section 15B(b)(2)(L) of the Securities Exchange Act 
of 1934 (15 U.S.C. 78o–4(b)(2)(L)) is amended— 
(1) in clause (iii), by striking ‘‘and’’ at the end; 
(2) in clause (iv), by striking the period and in-
serting ‘‘; and’’; and 
(3) by adding at the end the following: 
‘‘(v) not regulate as a municipal advi-
sor the activities of a person referred to in 
subparagraph (C) of subsection (e)(4), to 
the extent that such activities are de-
scribed under such subparagraph.’’. 
SEC. 3. DISCIPLINE OF MUNICIPAL SECURITIES DEALERS; 
CENSURE; SUSPENSION OR REVOCATION OF 
REGISTRATION. 
(a) IN GENERAL.—Section 15B(c)(1) of the Securi-
ties Exchange Act of 1934 (15 U.S.C. 78o–4(c)(1)) is 
amended to read as follows: 
‘‘(1) No broker, dealer, or municipal securities 
dealer shall make use of the mails or any means or 
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instrumentality of interstate commerce to effect any 
transaction in, or to induce or attempt to induce the 
purchase or sale of, any municipal security, and no 
broker, dealer, municipal securities dealer, or munic-
ipal 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 finan-
cial products, the issuance of municipal securities, or 
to undertake a solicitation of a municipal entity or 
obligated person, in contravention of any rule of the 
Board. A municipal advisor, when acting pursuant 
to 
an 
engagement 
described 
in 
subsection 
(e)(4)(A)(i), and any person associated with such 
municipal advisor, shall be deemed to have a fidu-
ciary duty with respect to such engagement to any 
municipal entity for whom such municipal advisor 
acts as a municipal advisor, and no municipal advi-
sor may engage in any act, practice, 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 Board. In issuing regulations to 
carry out the previous sentence and subsection 
(b)(2)(L)(i), the Board shall— 
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‘‘(A) require that a municipal advisor act 
in accordance with its fiduciary duty to its mu-
nicipal entity clients, but only in connection 
with those specific activities involving such mu-
nicipal entity client described under subsection 
(e)(4)(A)(i) (and not excluded under subsection 
(e)(4)(C)); 
‘‘(B) specify when such duties begin and 
terminate in relation to such activities; and 
‘‘(C) not prohibit principal transactions by 
municipal advisors or the receipt of compensa-
tion based on commissions or other standard 
compensation in relation to the purchase or sale 
of a security or other instrument (including de-
posit or foreign exchange), except that the 
Board— 
‘‘(i) may issue rules requiring a mu-
nicipal advisor to only engage in such 
transactions or receive such compensation 
in a manner that is consistent with the 
municipal advisor’s fiduciary duty; and 
‘‘(ii) may prohibit a municipal advisor 
that has been engaged to provide advice 
with respect to an underwritten offering of 
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securities from concurrently acting as an 
underwriter of such offering.’’. 
(b) TECHNICAL CORRECTION.— 
(1) IN
GENERAL.—Section 975(c)(5) of the 
Dodd-Frank Wall Street Reform and Consumer Pro-
tection Act is amended to read as follows: 
‘‘(5) in paragraph (4), by inserting ‘or munic-
ipal advisor’ after ‘municipal securities dealer’ each 
place that term appears;’’. 
(2) EFFECTIVE DATE.—The amendment made 
by paragraph (1) shall take effect on the date of the 
enactment of the Dodd-Frank Wall Street Reform 
and Consumer Protection Act, as if included in such 
Act. 
SEC. 4. DEFINITION OF INVESTMENT STRATEGIES. 
Section 15B(e)(3) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–4(e)(3)) is amended to read as fol-
lows: 
‘‘(3) the term ‘investment strategies’— 
‘‘(A) means plans or programs for the in-
vestment of the direct proceeds of municipal se-
curities (but not other public funds) that are 
not municipal derivatives or guaranteed invest-
ment contracts, and the recommendation of and 
brokerage of municipal escrow investments, 
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where, with respect to the municipal advisor of-
fering such plans, programs, or recommenda-
tions, such proceeds of municipal securities and 
municipal escrow investments— 
‘‘(i) are known or should be known to 
the municipal advisor to be comprised of 
funds or investments maintained in a seg-
regated account that is exclusively for the 
purpose of maintaining such proceeds or 
escrow investment; or 
‘‘(ii) have been identified to the mu-
nicipal advisor, in writing, as funds or in-
vestments that constitute the proceeds of 
municipal securities or municipal escrow 
investments; and 
‘‘(B) does not include— 
‘‘(i) merely acting as a broker or prin-
cipal with respect to the purchase or sale 
of a security or other instrument (includ-
ing deposit or foreign exchange); 
‘‘(ii) providing a list of, or price 
quotations for, investment options or secu-
rities or other instruments which may be 
available for purchase or investment or 
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