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
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—
‘‘(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
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,
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
which satisfy investment criteria specified 
by a municipal entity; 
‘‘(iii) acting as a custodian; 
‘‘(iv) providing generalized informa-
tion concerning investments which are not 
tailored to the specific investment objec-
tives of the municipal entity; or 
‘‘(v) providing advice with respect to 
matters other than the investment of funds 
or financial products;’’. 
SEC. 5. DEFINITION OF MUNICIPAL ADVISOR. 
Section 15B(e)(4) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–4(e)(4)) is amended to read as fol-
lows: 
‘‘(4) the term ‘municipal advisor’— 
‘‘(A) means a person (who is not a munic-
ipal entity or obligated person, or an employee 
of a municipal entity or obligated person) 
that— 
‘‘(i) is engaged, for compensation, by 
a municipal entity or obligated person to 
provide advice to a municipal entity or ob-
ligated person with respect to municipal fi-
nancial products or the issuance of munic-
ipal securities, including advice with re-
spect to the structure, timing, terms, and 
other similar matters concerning such fi-
nancial products or issues; or 
‘‘(ii) undertakes a solicitation of a 
municipal entity; 
‘‘(B) includes financial advisors, guaran-
teed investment contract brokers, third-party 
marketers, placement agents, solicitors, finders, 
and swap advisors, if such persons are de-
scribed in either of clauses (i) or (ii) of sub-
paragraph (A) and are not excluded under sub-
paragraph (C); and 
‘‘(C) does not include, solely as a result of 
their performing the following activities— 
‘‘(i) any broker, dealer, or municipal 
securities dealer registered with the Com-
mission, to the extent that such broker, 
dealer, or municipal securities dealer is 
serving or is seeking to serve as an under-
writer, 
placement 
agent, 
remarketing 
agent, dealer-manager, or in a similar ca-
pacity, or is providing advice related to or 
in connection with any such activities and 
not for separate compensation, or any per-
son associated with such a broker, dealer, 
or municipal securities dealer; 
‘‘(ii) an investment adviser registered 
under the Investment Advisers Act of 1940 
(15 U.S.C. 80b–1 et seq.) or with any 
State or territory of the United States that 
is providing investment advice (whether or 
not of a type that would subject a person 
to registration under such Act), or any 
person associated with such an investment 
adviser; 
‘‘(iii) any person registered under the 
Commodity Exchange Act (7 U.S.C. 1 et 
seq.) or this Act in relation to such per-
son’s activities with respect to swaps or se-
curity-based swaps that is providing advice 
related to swaps or security-based swaps, 
or providing advice that is related to or in 
connection with any such activities and not 
for separate compensation, or any person 
associated with such person; 
‘‘(iv) a financial institution engaging 
in any of the activities referred to in clause 
(i), (ii), or (iii) pursuant to an exemption 
from registration, acting as a dealer or
principal with respect to deposits, foreign 
exchange, or identified banking products 
(as defined in paragraphs (1) through (5) 
of section 206(a) of the Gramm-Leach-Bli-
ley Act (15 U.S.C. 78c(a))), providing 
other traditional banking or trust services 
otherwise subject to a fiduciary duty under 
State or Federal law, providing administra-
tive or operational services or support, or 
providing advice that is related to or in 
connection with any such activities and not 
for separate compensation; 
‘‘(v) 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 sepa-
rate compensation; 
‘‘(vi) an accountant (or person associ-
ated with such accountant) providing cus-
tomary and usual accounting services, in-
cluding any attestation or audit service or 
issuing letters for underwriters for a mu-
nicipal entity or providing advice that is 
related to or in connection with any such
activities and not for separate compensa-
tion; 
‘‘(vii) any attorney offering legal ad-
vice or providing services that are of a tra-
ditional legal nature; 
‘‘(viii) an engineer providing engineer-
ing advice; or 
‘‘(ix) any elected or appointed member 
of a governing body of a municipal entity 
or obligated person, with respect to such 
member’s role on the governing body;’’. 
SEC. 6. DEFINITION OF SOLICITATION OF A MUNICIPAL EN-
TITY OR OBLIGATED PERSON. 
Section 15B(e)(9) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–4(e)(9)) is amended by striking ‘‘or 
on behalf of a municipal entity; and’’ and inserting the 
following: ‘‘a municipal entity, but communications on be-
half 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 vehicle;’’. 
SEC. 7. DEFINITION OF MUNICIPAL DERIVATIVE. 
Section 15B(e) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–4(e)) is amended— 
(1) in paragraph (10), by striking the period on 
the end and inserting a semicolon; and
(2) by adding at the end the following: 
‘‘(11) the term ‘municipal derivative’ means a 
swap or security-based swap in which a municipal 
entity is a counterparty; and’’. 
SEC. 8. DEFINITION OF ON BEHALF OF. 
Section 15B(e) of the Securities Exchange Act of 
1934 (15 U.S.C. 78o–4(e)), as amended by section 7, is 
further amended by adding at the end the following: 
‘‘(12) 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 en-
gaged by a municipal entity or obligated person to 
provide services to such municipal entity or obligated 
person in connection with the issuance of municipal 
securities.’’. 
Passed the House of Representatives September 19, 
2012. 
Attest: 
Clerk.
112TH CONGRESS 
2D SESSION 
H. R. 2827 
AN ACT 
To amend the Securities Exchange Act of 1934 to 
clarify provisions relating to the regulation of 
municipal advisors, and for other purposes.