A provision in the Dodd-Frank Act requiring municipal advisors to register with the Securities Exchange Commission (SEC) and comply with regulations to be issued by the Municipal Securities Rulemaking Board raised questions as to whether community bankers providing advice to municipalities on banking products and services would have to register and comply. As part of IBAT's fight to relieve community banks of registration obligations, it filed a comment letter on the SEC's proposed rules urging the SEC to exempt community banks from registration. On Friday, September 18, 2013, the SEC finalized rules tailored to exempt banks providing advice on certain banking products and services to municipalities from registration.
According to a fact sheet issued by the SEC, the exemption does not apply to banks that:
- Engage in other municipal advisory activities such as providing advice on municipal derivatives or the issuance of municipal securities.
- Provide advice on municipal derivatives, in part because municipal derivatives were a source of significant losses by municipalities in the financial crisis.
The final rule will be effective 60 days after publication in the Federal Register.