NAICU Washington Update

NAICU Joins Community Comments to the SEC on "Municipal Advisor" Proposals

February 25, 2011

As previously reported, the Securities and Exchange Commission has proposed rules that would require individuals who fit the broad definition of "municipal advisor" to register with the SEC, and to comply with new record-keeping requirements. The SEC allowed a short comment period on this proposal.  NAICU joined both the Association of Governing Boards of Colleges and Universities (AGB) and American Council on Education (ACE) in submitting comments to the SEC by their February 22 deadline.

AGB took the lead in addressing the concerns of trustees and affiliated foundation members.  In its comments, AGB expressed firm opposition to the proposed requirements defining these individuals as "municipal advisors," and to the subsequent registration and record-keeping requirements. ACE addressed the issue from the the perspective of college and university employees and board members, also stating opposition to any new classification of these individuals as "municipal advisors."

The SEC proposal is part of the ongoing implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law this past summer.  Both comment letters contend that Congress never intended to regulate college and university officials as part of the Dodd-Frank Act, but rather meant to regulate "market professionals," "market participants," and "market intermediaries."

In addition, while the SEC definition of "municipal advisor" expressly excludes elected (but not appointed)trustees and employees of public colleges and universities, it does not expressly exclude trustees and employees of private colleges and universities.  The community comments argue that there is no sound reason to regulate employees of private institutions while exempting employees of public institutions, since got groups perform the same functions. 

NAICU signed on to the ACE letter, and NAICU sent a message of endorsement to the SEC on behalf of the AGB letter.  It remains unclear when final regulations might be issues on the various components of the implementation of the Dodd-Frank Act.

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