Editor’s Note: Tom Giachetti is one of our 2014 IA 25 honorees. Read his profile from the May issue of Investment Advisor here, and look for his extended profile on ThinkAdvisor.com on May 21.
Do you provide advice to government entities about financial products or the issuance of municipal securities? Do you advise government entities or persons about the structure, timing and terms concerning such financial products or issuances? Do you or have you solicited a municipal entity on behalf of third parties? If so, then you may be required to register as a municipal advisor.
The new municipal advisor law was created by Section 975 of the Dodd-Frank Act to amend Section 15B of the Exchange Act. It makes it “unlawful for a municipal advisor to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person, unless the municipal advisor is registered in accordance with [the law].”
This prohibition against providing advice to a municipal entity without registration is a maze. To understand the law fully, a more thorough understanding of the definitions of “advice” and “municipal advisor” is needed.
The term “municipal advisor” includes a person or entity (other than a municipal entity or employee of a municipal entity) that: “(i) provides advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including advice with respect to the structure, timing, terms and other similar matters concerning such financial products or issues; or (ii) undertakes a solicitation of a municipal entity.”
For purposes of the municipal advisor definition, the law does not hammer down what constitutes “advice” to a municipal entity.