SEC. 2. MUNICIPAL FINANCIAL ADVISER REGISTRATION 
REQUIREMENT. 
(a) IN GENERAL.—The Securities Exchange Act of 
1934 is amended by inserting after section 15E (15 
U.S.C. 78o–7) the following new section: 
‘‘SEC. 15F. MUNICIPAL FINANCIAL ADVISER REGISTRATION 
REQUIREMENT. 
‘‘(a)(1) It shall be unlawful for any person that is 
either a person other than a natural person or a natural 
person not associated with a municipal financial adviser 
which is a person other than a natural person to make 
use of the mails or any means or instrumentality of inter-
state commerce to act as a municipal financial adviser un-
less such person is registered as a municipal financial ad-
viser in accordance with subsection (b). 
‘‘(2) The Commission, by rule or order, as it deems 
consistent with the public interest and the protection of 
investors, may conditionally or unconditionally exempt 
from paragraph (1) of this section any municipal financial 
adviser or class of municipal financial advisers specified 
in such rule or order. 
‘‘(b)(1) A municipal financial adviser may be reg-
istered by filing with the Commission an application for 
registration in such form and containing such information 
and documents concerning such municipal financial ad-
viser and any persons associated with such municipal fi-
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nancial adviser as the Commission, by rule, may prescribe 
as necessary or appropriate in the public interest or for 
the protection of investors. Within 45 days of the date of 
the filing of such application (or within such longer period 
as to which the applicant consents), the Commission 
shall— 
‘‘(A) by order grant registration, or 
‘‘(B) institute proceedings to determine whether 
registration should be denied. Such proceedings shall 
include notice of the grounds for denial under con-
sideration and opportunity for hearing and shall be 
concluded within 120 days of the date of the filing 
of the application for registration. At the conclusion 
of such proceedings, the Commission, by order, shall 
grant or deny such registration. The Commission 
may extend the time for conclusion of such pro-
ceedings for up to 90 days if it finds good cause for 
such extension and publishes its reasons for so find-
ing or for such longer period as to which the appli-
cant consents. 
The Commission shall grant such registration if the 
Commission finds that the requirements of this sec-
tion are satisfied. The Commission shall deny such 
registration if it does not make such a finding or if 
it finds that if the applicant were so registered, its 
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registration would be subject to suspension or rev-
ocation under paragraph (4). 
‘‘(2) An application for registration of a municipal 
financial adviser to be formed or organized may be made 
by a municipal financial adviser to which the municipal 
financial adviser to be formed or organized is to be the 
successor. Such application, in such form as the Commis-
sion, by rule, may prescribe, shall contain such informa-
tion and documents concerning the applicant, the suc-
cessor, and any persons associated with the applicant or 
the successor, as the Commission, by rule, may prescribe 
as necessary or appropriate in the public interest or for 
the protection of investors. The grant or denial of registra-
tion to such an applicant shall be in accordance with the 
procedures set forth in paragraph (1) of this subsection. 
If the Commission grants such registration, the registra-
tion shall terminate on the 45th day after the effective 
date thereof, unless prior thereto the successor shall, in 
accordance with such rules and regulations as the Com-
mission may prescribe, adopt the application for registra-
tion as its own. 
‘‘(3) Any provision of this title (other than section 
5 and subsection (a) of this section) which prohibits any 
act, practice, or course of business if the mails or any 
means or instrumentality of interstate commerce is used 
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in connection therewith shall also prohibit any such act, 
practice, or course of business by any registered municipal 
financial adviser or any person acting on behalf of such 
a municipal financial adviser, irrespective of any use of 
the mails or any means or instrumentality of interstate 
commerce in connection therewith. 
‘‘(4) The Commission, by order, shall censure, place 
limitations on the activities, functions, or operations of, 
suspend for a period not exceeding 12 months, or revoke 
the registration of any municipal financial adviser if it 
finds, on the record after notice and opportunity for hear-
ing, that such censure, placing of limitations, suspension, 
or revocation is in the public interest and that such munic-
ipal financial adviser, whether prior or subsequent to be-
coming such, or any person associated with such municipal 
financial adviser, whether prior or subsequent to becoming 
so associated— 
‘‘(A) has willfully made or caused to be made 
in any application for registration or report required 
to be filed with the Commission or with any other 
appropriate regulatory agency under this title, or in 
any proceeding before the Commission with respect 
to registration, any statement which was at the time 
and in the light of the circumstances under which it 
was made false or misleading with respect to any 
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material fact, or has omitted to state in any such 
application or report any material fact which is re-
quired to be stated therein; 
‘‘(B) has been convicted within 10 years pre-
ceding the filing of any application for registration 
or at any time thereafter of any felony or mis-
demeanor or of a substantially equivalent crime by 
a foreign court of competent jurisdiction which the 
Commission finds— 
‘‘(i) involves the purchase or sale of any 
security, the taking of a false oath, the making 
of a false report, bribery, perjury, burglary, any 
substantially equivalent activity however de-
nominated by the laws of the relevant foreign 
government, or conspiracy to commit any such 
offense; 
‘‘(ii) arises out of the conduct of the busi-
ness of a municipal financial adviser, broker, 
dealer, municipal securities dealer, government 
securities broker, government securities dealer, 
investment adviser, bank, insurance company, 
fiduciary, transfer agent, nationally recognized 
statistical rating organization, foreign person 
performing a function substantially equivalent 
to any of the above, or entity or person required 
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to be registered under the Commodity Ex-
change Act (7 U.S.C. 1 et seq.) or any substan-
tially equivalent foreign statute or regulation; 
‘‘(iii) involves the larceny, theft, robbery, 
extortion, forgery, counterfeiting, fraudulent 
concealment, embezzlement, fraudulent conver-
sion, or misappropriation of funds, or securities, 
or substantially equivalent activity however de-
nominated by the laws of the relevant foreign 
government; or 
‘‘(iv) involves the violation of section 152, 
1341, 1342, or 1343 or chapter 25 or 47 of 
title 18, or a violation of a substantially equiva-
lent foreign statute; 
‘‘(C) is permanently or temporarily enjoined by 
order, judgment, or decree of any court of competent 
jurisdiction from acting as a municipal financial ad-
viser, investment adviser, underwriter, broker, deal-
er, municipal securities dealer, government securities 
broker, government securities dealer, transfer agent, 
nationally recognized statistical rating organization, 
foreign person performing a function substantially 
equivalent to any of the above, or entity or person 
required to be registered under the Commodity Ex-
change Act or any substantially equivalent foreign 
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regulations, another person who commits such a vio-
lation, if such other person is subject to his super-
vision. For the purposes of this subparagraph, no 
person shall be deemed to have failed reasonably to 
supervise any other person, if— 
‘‘(i) there have been established proce-
dures, and a system for applying such proce-
dures, which would reasonably be expected to 
prevent and detect, insofar as practicable, any 
such violation by such other person, and 
‘‘(ii) such person has reasonably dis-
charged the duties and obligations incumbent 
upon him by reason of such procedures and sys-
tem without reasonable cause to believe that 
such procedures and system were not being 
complied with; 
‘‘(F) is subject to any order of the Commission 
barring or suspending the right of the person to be 
associated with a municipal financial adviser; 
‘‘(G) has been found by a foreign financial reg-
ulatory authority to have— 
‘‘(i) made or caused to be made in any ap-
plication for registration or report required to 
be filed with a foreign financial regulatory au-
thority, or in any proceeding before a foreign fi-
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nancial regulatory authority with respect to reg-
istration, any statement that was at the time 
and in the light of the circumstances under 
which it was made false or misleading with re-
spect to any material fact, or has omitted to 
state in any application or report to the foreign 
financial regulatory authority any material fact 
that is required to be stated therein; 
‘‘(ii) violated any foreign statute or regula-
tion regarding transactions in securities, or con-
tracts of sale of a commodity for future deliv-
ery, traded on or subject to the rules of a con-
tract market or any board of trade; 
‘‘(iii) aided, abetted, counseled, com-
manded, induced, or procured the violation by 
any person of any provision of any statutory 
provisions enacted by a foreign government, or 
rules or regulations thereunder, empowering a 
foreign financial regulatory authority regarding 
transactions in securities, or contracts of sale of 
a commodity for future delivery, traded on or 
subject to the rules of a contract market or any 
board of trade, or has been found, by a foreign 
financial regulatory authority, to have failed 
reasonably to supervise, with a view to pre-
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venting violations of such statutory provisions, 
rules, and regulations, another person who com-
mits such a violation, if such other person is 
subject to his supervision; or 
‘‘(H) is subject to any final order of a State se-
curities commission (or any agency or officer per-
forming like functions), State authority that super-
vises or examines banks, savings associations, or 
credit unions, State insurance commission (or any 
agency or office performing like functions), an ap-
propriate Federal banking agency (as defined in sec-
tion 3 of the Federal Deposit Insurance Act (12 
U.S.C. 1813(q))), or the National Credit Union Ad-
ministration, that— 
‘‘(i) bars such person from association with 
an entity regulated by such commission, author-
ity, agency, or officer, or from engaging in the 
business of securities, insurance, banking, sav-
ings association activities, or credit union activi-
ties; or 
‘‘(ii) constitutes a final order based on vio-
lations of any laws or regulations that prohibit 
fraudulent, manipulative, or deceptive conduct. 
‘‘(5) Pending final determination whether any reg-
istration under this subsection shall be revoked, the Com-
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mission, by order, may suspend such registration, if such 
suspension appears to the Commission, after notice and 
opportunity for hearing, to be necessary or appropriate in 
the public interest or for the protection of investors. Any 
registered municipal financial adviser may, upon such 
terms and conditions as the Commission deems necessary 
or appropriate in the public interest or for the protection 
of investors, withdraw from registration by filing a written 
notice of withdrawal with the Commission. If the Commis-
sion finds that any registered municipal financial adviser 
is no longer in existence or has ceased to do business as 
a municipal financial adviser, the Commission, by order, 
shall cancel the registration of such municipal financial 
adviser. 
‘‘(6)(A) With respect to any person who is associated, 
who is seeking to become associated, or, at the time of 
the alleged misconduct, who was associated or was seeking 
to become associated with a municipal financial adviser, 
the Commission, by order, shall censure, place limitations 
on the activities or functions of such person, or suspend 
for a period not exceeding 12 months, or bar such person 
from being associated with a municipal financial adviser, 
if the Commission finds, on the record after notice and 
opportunity for a hearing, that such censure, placing of 
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limitations, suspension, or bar is in the public interest and 
that such person— 
‘‘(i) has committed or omitted any act, or is 
subject to an order or finding, enumerated in sub-
paragraph (A), (D), or (E) of paragraph (4) of this 
subsection; 
‘‘(ii) has been convicted of any offense specified 
in subparagraph (B) of such paragraph (4) within 
10 years of the commencement of the proceedings 
under this paragraph; or 
‘‘(iii) is enjoined from any action, conduct, or 
practice specified in subparagraph (C) of such para-
graph (4). 
‘‘(B) It shall be unlawful— 
‘‘(i) for any person as to whom an order under 
subparagraph (A) is in effect, without the consent of 
the Commission, willfully to become, or to be, associ-
ated with a municipal financial adviser in contraven-
tion of such order; or 
‘‘(ii) for any municipal financial adviser to per-
mit such a person, without the consent of the Com-
mission, to become or remain, a person associated 
with the municipal financial adviser in contravention 
of such order, if such municipal financial adviser 
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knew, or in the exercise of reasonable care should 
have known, of such order. 
‘‘(7) No registered municipal financial adviser shall 
act as such unless it meets such standards of operational 
capability and such municipal financial adviser and all 
natural persons associated with such municipal financial 
adviser meet such standards of training, experience, com-
petence, and such other qualifications as the Commission 
finds necessary or appropriate in the public interest or for 
the protection of investors. The Commission shall establish 
such standards by rules and regulations, which may— 
‘‘(A) specify that all or any portion of such 
standards shall be applicable to any class of munic-
ipal financial advisers and persons associated with 
municipal financial advisers; 
‘‘(B) require persons in any such class to pass 
tests prescribed in accordance with such rules and 
regulations, which tests shall, with respect to any 
class of partners, officers, or supervisory employees 
(which latter term may be defined by the Commis-
sion’s rules and regulations) engaged in the manage-
ment of the municipal financial adviser, include 
questions relating to bookkeeping, accounting, super-
vision of employees, maintenance of records, and 
other appropriate matters; and 
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‘‘(C) provide that persons in any such class 
other than municipal financial advisers and partners, 
officers, and supervisory employees of municipal fi-
nancial advisers, may be qualified solely on the basis 
of compliance with such standards of training and 
such other qualifications as the Commission finds 
appropriate. 
The Commission, by rule, may prescribe reasonable fees 
and charges to defray its costs in carrying out this para-
graph, including, but not limited to, fees for any test ad-
ministered by it or under its direction. 
‘‘(c)(1)(A) No municipal financial adviser shall make 
use of the mails or any means or instrumentality of inter-
state commerce in connection with which such municipal 
financial adviser engages in any fraudulent, deceptive, or 
manipulative act or practice or violates such rules and reg-
ulations regarding conflicts of interest or fair practices, 
including but not limited to rules and regulations related 
to political contributions, as the Commission shall pre-
scribe in the public interest or for the protection of inves-
tors or to maintain fair and orderly markets. 
‘‘(B) The Commission shall, for the purposes of this 
paragraph as the Commission finds necessary or appro-
priate in the public interest or for the protection of inves-
tors, by rules and regulations define, and prescribe means 
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reasonably designed to prevent, such acts and practices 
as are fraudulent, deceptive, or manipulative. 
‘‘(2) If the Commission finds, after notice and oppor-
tunity for a hearing, that any person subject to the provi-
sions of this section or any rule or regulation thereunder 
has failed to comply with any such provision, rule, or regu-
lation in any material respect, the Commission may pub-
lish its findings and issue an order requiring such person, 
and any person who was a cause of the failure to comply 
due to an act or omission the person knew or should have 
known would contribute to the failure to comply, to com-
ply, or to take steps to effect compliance, with such provi-
sion or such rule or regulation thereunder upon such 
terms and conditions and within such time as the Commis-
sion may specify in such order. 
‘‘(d) Every registered municipal financial adviser 
shall establish, maintain, and enforce written policies and 
procedures reasonably designed, taking into consideration 
the nature of such municipal financial adviser’s business, 
to prevent the misuse in violation of this title, or the rules 
or regulations thereunder, of material, nonpublic informa-
tion by such municipal financial adviser or any person as-
sociated with such municipal financial adviser. The Com-
mission, as it deems necessary or appropriate in the public 
interest or for the protection of investors, shall adopt rules 
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or regulations to require specific policies or procedures 
reasonably designed to prevent misuse in violation of this 
title (or the rules or regulations thereunder) of material, 
nonpublic information. 
‘‘(e) A municipal financial adviser and any person as-
sociated with such municipal financial adviser shall be 
deemed to have a fiduciary duty to any municipal securi-
ties issuer for whom such municipal financial adviser acts 
as a municipal financial adviser. A municipal financial ad-
viser may not engage in any act, practice, or course of 
business which is not consistent with a municipal financial 
adviser’s fiduciary duty. The Commission shall, for the 
purposes of this paragraph, by rules and regulations de-
fine, and prescribe means reasonably designed to prevent, 
such acts, practices, and courses of business as are not 
consistent with a municipal financial adviser’s fiduciary 
duty to its clients.’’. 
(b) DEFINITION.—Section 3(a) of the Securities Ex-
change Act of 1934 (15 U.S.C. 78c(a)) is amended by 
adding at the end the following new paragraph: 
‘‘(65) MUNICIPAL FINANCIAL ADVISER.— 
‘‘(A) The term ‘municipal financial adviser’ 
means a person who, for compensation, engages 
in the business of— 
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‘‘(i) providing advice to a municipal 
securities issuer with respect to— 
‘‘(I) the issuance or proposed 
issuance of securities, including any 
remarketing of municipal securities 
directly or indirectly by or on behalf 
of a municipal securities issuer; 
‘‘(II) the investment of proceeds 
from securities issued by such munic-
ipal securities issuer; 
‘‘(III) the hedging of any risks 
associated with subclauses (I) or (II), 
including advice as to swap agree-
ments (as defined in section 206A of 
the Gramm-Leach-Bliley Act regard-
less of whether the counterparties 
constitute eligible contract partici-
pants); or 
‘‘(IV) preparation of disclosure 
documents in connection with the 
issuance, proposed issuance, or pre-
vious issuance of securities issued by 
a municipal securities issuer, includ-
ing, without limitation, official state-
ments and documents prepared in 
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connection with a written agreement 
or contract for the benefit of holders 
of such securities described in section 
240.15c2–12 of title 17, Code of Fed-
eral Regulations; or 
‘‘(ii) assisting a municipal securities 
issuer in selecting or negotiating guaran-
teed investment contracts or other invest-
ment products; or 
‘‘(iii) assisting any municipal securi-
ties issuer in the primary offering of secu-
rities not involving a public offering. 
‘‘(B) Such term does not include— 
‘‘(i) an attorney, if the attorney is of-
fering advice or providing services that are 
of a traditional legal nature; 
‘‘(ii) a nationally recognized statistical 
rating organization to the extent it is in-
volved in the process of developing credit 
ratings; 
‘‘(iii) a registered broker-dealer when 
acting as an underwriter, as such term is 
defined in section 2(a)(11) of the Securi-
ties Act of 1933 (15 U.S.C. section 
77b(a)(11)); or 
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‘‘(iv) a State or any political subdivi-
sion thereof. 
‘‘(66) MUNICIPAL
SECURITIES
ISSUER.—The 
term ‘municipal securities issuer’ means— 
‘‘(A) any entity that has the ability to 
issue a security the interest on which is exclud-
able from gross income under section 103 of the 
Internal Revenue Code of 1986 and the regula-
tions thereunder; or 
‘‘(B) any person who receives the proceeds 
generated from the issuance of municipal secu-
rities. 
‘‘(67) PERSON ASSOCIATED WITH A MUNICIPAL 
FINANCIAL ADVISER; ASSOCIATED PERSON OF A MU-
NICIPAL FINANCIAL ADVISER.—The term ‘person as-
sociated with a municipal financial adviser’ or ‘asso-
ciated person of a municipal financial adviser’ means 
any partner, officer, director, or branch manager of 
such municipal financial adviser (or any person oc-
cupying a similar status or performing similar func-
tions), any person directly or indirectly controlling, 
controlled by, or under common control with such 
municipal financial adviser, or any employee of such 
municipal financial adviser, except that any person 
associated with a municipal financial adviser whose 
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functions are solely clerical or ministerial shall not 
be included in the meaning of such term for pur-
poses of section 15F(b) (other than paragraph (6) 
thereof).’’. 
SEC. 3. CONFORMING AMENDMENTS. 
(a) SECURITIES EXCHANGE ACT OF 1934 .—The Se-
curities Exchange Act of 1934 is amended— 
(1) in section 15(b)(4)(B)(ii) (15 U.S.C. 
78o(b)(4)(B)(ii)), by inserting ‘‘municipal finance 
adviser,’’ after ‘‘nationally recognized statistical rat-
ing organization,’’; 
(2) 
in 
section 
15(b)(4)(C) 
(15 
U.S.C. 
78o(b)(4)(C)), by inserting ‘‘municipal finance ad-
viser,’’ after ‘‘nationally recognized statistical rating 
organization,’’; and 
(3) in section 17(a)(1) (15 U.S.C. 78q(a)(1)), 
by inserting ‘‘registered municipal financial adviser,’’ 
after ‘‘nationally recognized statistical rating organi-
zation,’’. 
(b) INVESTMENT COMPANY ACT OF 1940.—The In-
vestment Company Act of 1940 is amended— 
(1) in section 2(a) (15 U.S.C. 80a–2(a)), by in-
serting the following new paragraph: 
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