[Congressional Bills 112th Congress]
[From the U.S. Government Publishing Office]
[H.R. 2827 Introduced in House (IH)]

112th CONGRESS
  1st Session
                                H. R. 2827

  To amend the Securities Exchange Act of 1934 to clarify provisions 
    relating to the regulation of municipal advisors, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                            August 26, 2011

   Mr. Dold introduced the following bill; which was referred to the 
                    Committee on Financial Services

_______________________________________________________________________

                                 A BILL


 
  To amend the Securities Exchange Act of 1934 to clarify provisions 
    relating to the regulation of municipal advisors, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. DEFINITION OF MUNICIPAL ADVISOR.

    Section 15B(e)(4) of the Securities Exchange Act of 1934 is amended 
to read as follows:
            ``(4) the term `municipal advisor'--
                    ``(A) means a person (who is not a municipal entity 
                or an employee of a municipal entity) that--
                            ``(i) is formally engaged, in writing and 
                        for compensation, by a municipal entity to 
                        provide advice to a municipal entity 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 such purpose;
                    ``(B) includes financial advisors, guaranteed 
                investment contract brokers, third-party marketers, 
                placement agents, solicitors, finders, and swap 
                advisors, if such persons are described in either of 
                clauses (i) or (ii) of subparagraph (A); and
                    ``(C) does not include--
                            ``(i) any broker, dealer, or municipal 
                        securities dealer (or person associated with 
                        such broker, dealer or municipal securities 
                        dealer);
                            ``(ii) any investment adviser registered 
                        under the Investment Advisers Act of 1940 or 
                        with a State or territory of the United States 
                        (or person associated with such an investment 
                        adviser);
                            ``(iii) any commodity trading advisor, swap 
                        dealer, major swap participant, futures 
                        commission merchant or introducing broker 
                        registered under the Commodity Exchange Act (or 
                        person associated with a commodity trading 
                        advisor, swap dealer, major swap participant, 
                        futures commission merchant or introducing 
                        broker) who is providing advice related to, 
                        engaging in, or arranging any swap;
                            ``(iv) any security-based swap dealer or 
                        major security-based swap participant 
                        registered under the Securities Exchange Act of 
                        1934 (or any person associated with a security-
                        based swap dealer or major security-based swap 
                        participant) who is providing advice related 
                        to, engaging in, or arranging any security-
                        based swap;
                            ``(v) any attorney offering legal advice or 
                        providing services that are of a traditional 
                        legal nature;
                            ``(vi) any engineer providing engineering 
                        advice;
                            ``(vii) any financial institution or person 
                        associated with a financial institution; or
                            ``(viii) any elected or appointed member of 
                        a governing body of a municipal entity, with 
                        respect to such member's role on the governing 
                        body;''.

SEC. 2. DEFINITION OF INVESTMENT STRATEGIES.

    Section 15B(e)(3) of the Securities Exchange Act of 1934 is amended 
to read as follows:
            ``(3) the term `investment strategies'--
                    ``(A) means plans or programs for the investment of 
                the proceeds of municipal securities (but not other 
                public funds) that are not municipal derivatives or 
                guaranteed investment contracts, and the recommendation 
                of and brokerage of municipal escrow investments, 
                where, with respect to the municipal advisor offering 
                such plans, programs, or recommendations, such proceeds 
                of municipal securities and municipal escrow 
                investments--
                            ``(i) are known to the municipal advisor to 
                        be comprised of funds or investments maintained 
                        in a segregated account that is exclusively for 
                        the purpose of maintaining such proceeds or 
                        escrow investment; or
                            ``(ii) have been identified to the 
                        municipal advisor, in writing, as funds or 
                        investments that constitute the proceeds of 
                        municipal securities or municipal escrow 
                        investments; and
                    ``(B) does not include--
                            ``(i) merely acting as a broker or 
                        principal with respect to the purchase or sale 
                        of a security or other instrument;
                            ``(ii) providing a list of, or price 
                        quotations for, investment options or 
                        securities or other instruments which may be 
                        available for purchase or investment or which 
                        satisfy investment criteria specified by a 
                        municipal entity;
                            ``(iii) acting as a custodian;
                            ``(iv) providing generalized information 
                        concerning investments which are not tailored 
                        to the specific investment objectives of the 
                        municipal entity; or
                            ``(v) providing advice with respect to 
                        matters other than the investment of funds or 
                        financial products;''.

SEC. 3. DEFINITION OF SOLICITATION OF A MUNICIPAL ENTITY.

    Section 15B(e)(9) of the Securities Exchange Act of 1934 is amended 
by inserting before the semicolon the following ``, but where 
communications on behalf of a fund or other collective investment 
vehicle shall not be deemed to be on behalf of any investment adviser 
that advises or manages such fund or investment vehicle''.

SEC. 4. ELIMINATION OF FEDERAL FIDUCIARY STANDARD FOR MUNICIPAL 
              ADVISORS.

    Section 15B(c)(1) of the Securities Exchange Act of 1934 is amended 
by striking the second sentence and inserting the following:
        ``No municipal advisor may engage in any act, practice, or 
        course of business that is in contravention of any rule of the 
        Board. In issuing regulations to carry out this paragraph, the 
        Board shall--
                    ``(A) limit the duties of municipal advisors in 
                relation to municipal entities to those specific 
                activities involving such municipal entity described 
                under the definition of municipal advisor in subsection 
                (e)(4);
                    ``(B) specify when such duties begin and terminate 
                in relation to such activities; and
                    ``(C) not prohibit principal transactions by 
                municipal advisors.''.
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