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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 
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-
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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)) (as amended by 
section 3201(6)) is amended by adding at the end the fol-
lowing new paragraphs: 
‘‘(78) MUNICIPAL FINANCIAL ADVISER.— 
‘‘(A) The term ‘municipal financial adviser’ 
means a person who, for compensation, engages 
in the business of— 
‘‘(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; 
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‘‘(II) the investment of proceeds 
from securities issued by such munic-
ipal securities issuer; 
‘‘(III) the hedging of any risks 
associated with subclause (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 
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; 
‘‘(ii) assisting a municipal securities 
issuer in selecting or negotiating guaran-
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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. 77b(a)(11)); 
‘‘(iv) a State or any political subdivi-
sion thereof; or 
‘‘(v) the independent accountant that 
audits the financial statements of the mu-
nicipal securities issuer. 
‘‘(79) MUNICIPAL
SECURITIES
ISSUER.—The 
term ‘municipal securities issuer’ means— 
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‘‘(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. 
‘‘(80) 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 
functions are solely clerical or ministerial shall not 
be included in the meaning of such term for pur-
poses of section 15G(b) (other than paragraph (6) 
thereof).’’. 
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SEC. 7802. 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 at the end the following new paragraph: 
‘‘(54) The term ‘municipal finance adviser’ has 
the same meaning as in section 3 of the Securities 
Exchange Act of 1934.’’; 
(2) in section 9(a)(1) (15 U.S.C. 80a–9(a)(1)), 
by inserting ‘‘municipal finance adviser,’’ after 
‘‘credit rating agency,’’; and 
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