WASHINGTON Feb 14 A long-delayed definition of
U.S. municipal advisers will be more narrow than originally
proposed, the U.S. Securities and Exchange Commission's chairman
said on Thursday, acknowledging criticism that the commission's
first version would have subjected too many people to
"We anticipate that the final rules would address, among
other things, the well-publicized concerns about the need for an
exception from registration for appointed board members of
municipal entities," commissioner Elisse Walter said at a Senate
hearing. Walter spearheaded moves to tighten oversight of the
$3.7 trillion municipal bond market.
"In addition, the staff is continuing to discuss...a final
rule that requires appropriate registration of parties engaging
in municipal advisory activities without unnecessarily imposing
The Dodd-Frank financial reform law brought municipal
advisers under federal regulation and required them to register,
alongside brokers and dealers, with the Securities and Exchange
The law, however, did not identify who counted as an
adviser. When the SEC released a proposed definition in December
2010, it received thousands of comments that it was "overbroad"
and would force volunteers and others on the edges of municipal
finance to abide by tough regulations.
The House of Representatives went so far as to take up
legislation defining an adviser, but the lead lawmaker, Robert
Dold of Illinois, lost his seat in November's election.
More than two years after the first definition was released
- and the requirement to register was supposed to come into
effect - the market is still awaiting a final version. Walter
did not indicate the timing of a release, but said it is "now
the highest immediate priority of the SEC's newly established
Office of Municipal Securities."
The Securities Industry and Financial Markets Association
said last month it expects federal securities regulators to
release a definition in the first half of 2013.