Jan 16 A financial industry group said on
Wednesday it expects federal securities regulators to release
long-awaited language about who qualifies as a municipal adviser
in the first half of this year.
The U.S. Securities and Exchange Commission has said it will
finalize a definition of municipal advisers by the first quarter
of 2013, but it could take longer, said Kenneth Bentsen Jr.,
acting president and CEO of the Securities Industry and
Financial Markets Association (SIFMA).
"These things have a way of slipping," Bentsen said at a
media briefing on the finalization of the definition.
The new definition is in response to the 2010 Dodd Frank law
that mandated tougher regulation of advisers to issuers in the
$3.7 trillion U.S. municipal bond market to protect the
interests of small towns, counties and states.
The SEC had proposed a temporary rule and was to have
finalized a definition by Sept. 30. But it said on Sept. 21 that
it was pushing its deadline back a year.
The definition is already years in the making - a proposal
the SEC released in December 2010 on who qualified as an adviser
spawned hundreds of comments and the commission ultimately
pulled it. Implementation of other parts of the Dodd-Frank law
have been delayed as regulators await a revision.
For years, municipal financial advisers, swap advisers,
guaranteed investment contract brokers, placement agents and
other consultants were largely unregulated. Critics said that
helped set the stage for a wave of recent crises involving
complex financial instruments that panned out badly for local
In September, Senate Majority Leader Harry Reid decided to
push off a vote on a House-passed bill clarifying the definition
of municipal advisers.
The clarification - long sought by municipalities, the firms
that advise them on financing, and bond dealers - had been
approved by the House of Representatives to ensure regulations
do not ensnare too many people on the periphery of the $3.7
trillion municipal bond industry.
The measure, backed by SIFMA, was criticized by some as
being too lenient and exempting too many people from regulation.
Lawmakers have not addressed the legislation so far in the
current session of Congress.