[Federal Register Volume 76, Number 248 (Tuesday, December 27, 2011)]
[Rules and Regulations]
[Pages 80733-80735]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-33146]


=======================================================================
-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

17 CFR Part 240

[Release No. 34-66020; File No. S7-19-10]
RIN 3235-AK69


Extension of Temporary Registration of Municipal Advisors

AGENCY: Securities and Exchange Commission.

ACTION: Interim final temporary rule; extension.

-----------------------------------------------------------------------

SUMMARY: The Securities and Exchange Commission (``Commission'') is 
amending interim final temporary Rule 15Ba2-6T, which provides for the 
temporary registration of municipal advisors under the Securities 
Exchange Act of 1934 (``Exchange Act''), as amended by the Dodd-Frank 
Wall Street Reform and Consumer Protection Act (``Dodd-Frank Act''), to 
extend the date on which Rule 15Ba2-6T will sunset from December 31, 
2011 to September 30, 2012. Under the amendment, all temporary 
registrations submitted pursuant to Rule 15Ba2-6T will expire no later 
than September 30, 2012.

DATES: Effective Date: December 31, 2011. The expiration of the 
effective period of interim final temporary Rule 15Ba2-6T (17 CFR 
240.15Ba2-6T) is delayed from December 31, 2011, to September 30, 2012.

FOR FURTHER INFORMATION CONTACT: Victoria Crane, Assistant Director, 
Office of Market Supervision, at (202) 551-5744; Yue Ding, Attorney-
Adviser, Office of Market Supervision, at (202) 551-5842; Mary 
Simpkins, Senior Special Counsel, Office of Municipal Securities, at 
(202) 551-5683; Dave Sanchez, Attorney Fellow, Office of Municipal 
Securities, at (202) 551-5540; John L. McWilliams, III, Attorney 
Fellow, Office of Municipal Securities, at (202) 551-5688; or any of 
the above at Division of Trading and Markets, Securities and Exchange 
Commission, 100 F Street NE., Washington, DC 20549-6628.

SUPPLEMENTARY INFORMATION: The Commission is extending the expiration 
date for interim final temporary Rule 15Ba2-6T under the Exchange Act.

I. Discussion

    Section 15B(a)(1) of the Exchange Act,\1\ as amended by Section 
975(a)(1)(B) of the Dodd-Frank Act,\2\ 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 with the Commission. Section 15B(a)(2) of the Exchange 
Act,\3\ as amended by Section 975(a)(2) of the Dodd-Frank Act, provides 
that a municipal advisor may be registered by filing with the 
Commission an application for registration in such form and containing 
such information and documents concerning the municipal advisor and any 
person associated with the municipal advisor as the Commission, by 
rule, may prescribe as necessary or appropriate in the public interest 
or for the protection of investors.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78o-4(a)(1).
    \2\ Public Law 111-203, 124 Stat. 1376 (2010).
    \3\ 15 U.S.C. 78o-4(a)(2).
---------------------------------------------------------------------------

    The registration requirement for municipal advisors became 
effective on October 1, 2010. On September 1, 2010, the Commission 
adopted interim final temporary Rule 15Ba2-6T under the Exchange 
Act,\4\ which permits municipal advisors to temporarily satisfy the 
statutory registration requirement by completing Form MA-T \5\ through 
the Commission's public Web site.\6\ Rule 15Ba2-6T serves as a 
transitional step to the implementation of a permanent registration 
program, makes relevant information available to the public and 
municipal entities, and permits municipal advisors to continue their 
business after October 1, 2010.
---------------------------------------------------------------------------

    \4\ 17 CFR 240.15Ba2-6T.
    \5\ 17 CFR 249.1300T.
    \6\ See Securities Exchange Act Release No. 62824, 75 FR 54465 
(September 8, 2010) (``Interim Release''). The Commission received 
seven comment letters on the Interim Release. See letters from Brad 
R. Jacobsen, dated September 7, 2010; John J. Wagner, Kutak Rock 
LLP, dated September 28, 2010; Joy A. Howard, Principal, WM 
Financial Strategies, dated October 5, 2010; Steve Apfelbacher, 
President, National Association of Independent Public Finance 
Advisors, dated October 8, 2010; Carolyn Walsh, Vice President and 
Senior Counsel, Center for Securities, Trust and Investments, 
American Bankers Association, Deputy General Counsel, ABA Securities 
Association, dated October 13, 2010; Amy Natterson Kroll and W. 
Hardy Callcott, Bingham McCutchen LLP, on behalf of the National 
Association of Energy Service Companies, dated October 13, 2010; and 
Leslie M. Norwood, Managing Director and Associate General Counsel, 
Securities Industry and Financial Markets Association, dated 
November 15, 2010.
---------------------------------------------------------------------------

    Under existing Rule 15Ba2-6T, all temporary registrations submitted 
pursuant to that rule will expire on the earlier of: (1) The date that 
the municipal advisor's registration is approved or disapproved by the 
Commission pursuant to a final rule adopted by the Commission 
establishing another manner of registration of municipal advisors and 
prescribing a form for such purpose; \7\ (2) the date on which the 
municipal advisor's temporary registration is rescinded by the 
Commission; or (3) on December 31, 2011.\8\ Further, existing Rule 
15Ba2-6T will expire on December 31, 2011.\9\
---------------------------------------------------------------------------

    \7\ On December 20, 2010, the Commission proposed for public 
comment rules for the permanent registration of municipal advisors. 
See Securities Exchange Act Release No. 63576; 76 FR 824 (January 6, 
2011) (``Proposing Release'').
    \8\ See 17 CFR 240.15Ba2-6T(e).
    \9\ See 17 CFR 240.15Ba2-6T(f).
---------------------------------------------------------------------------

    As stated in the Interim Release, the Commission believes that 
providing a temporary registration process for municipal advisors, 
pursuant to an interim final temporary rule, is a

[[Page 80734]]

necessary and appropriate way to proceed, is consistent with the intent 
of Congress in enacting Section 975 of the Dodd-Frank Act, and is a 
tailored way to provide investors and municipal entities with basic and 
important information while the Commission considers a permanent 
registration program. As noted above, however, existing Rule 15Ba2-6T 
will expire on December 31, 2011. Accordingly, the Commission has 
determined that it is necessary and appropriate to extend the 
expiration date of Rule 15Ba2-6T to September 30, 2012, to provide a 
method for municipal advisors to continue to temporarily satisfy the 
registration requirement under Section 15B of the Exchange Act until 
the Commission promulgates a final rule establishing another manner of 
registration of municipal advisors, prescribing a form for such 
purpose, and developing an electronic registration system. This 
extension will prevent a gap between the time at which the temporary 
rule expires and at which municipal advisors must be registered with 
the Commission under a permanent registration regime. The Commission 
notes that it is adopting amendments to Rule 15Ba2-6T only to extend 
the expiration date of that rule. The Commission is not making any 
other amendments to Rule 15Ba2-6T or Form MA-T.
    Specifically, the Commission is amending Rule 15Ba2-6T(e) to 
provide that all temporary registrations submitted pursuant to Rule 
15Ba2-6T will expire on the earlier of: (1) The date that the municipal 
advisor's registration is approved or disapproved by the Commission 
pursuant to a final rule adopted by the Commission establishing another 
manner of registration of municipal advisors and prescribing a form for 
such purpose; (2) the date on which the municipal advisor's temporary 
registration is rescinded by the Commission; or (3) on September 30, 
2012. The Commission is also amending Rule 15Ba2-6T(f) to provide that 
the interim final temporary rule will expire on September 30, 2012. 
Thus, absent further action by the Commission, Rule 15Ba2-6T will 
expire on September 30, 2012 at 11:59 p.m. Eastern Time.
    The Commission has considered the seven comment letters received on 
the Interim Release \10\ and, given the limited nature of this 
extension and the Commission's ongoing process of considering permanent 
rules for the registration of municipal advisors, the Commission is not 
making any other changes to the temporary registration rule and Form 
MA-T. The Commission believes that making other changes to the 
temporary rule and Form MA-T could cause those relying on the rule or 
form to need to make adjustments to their operations or amendments to 
their forms that may be applicable only until the permanent rules are 
considered by the Commission. The Commission also notes that the 
comment letters received in response to the Interim Release were 
addressed in the Proposing Release, and were considered for purposes of 
the proposed rules for the registration of municipal advisors.
---------------------------------------------------------------------------

    \10\ See supra note 6.
---------------------------------------------------------------------------

    The amendments to Rule 15Ba2-6T will be effective on December 31, 
2011. The Administrative Procedure Act (``APA'') generally requires an 
agency to publish notice of a proposed rulemaking in the Federal 
Register.\11\ This requirement does not apply, however, if the agency 
``for good cause finds (and incorporates the finding and a brief 
statement of reasons therefor in the rules issued) that notice and 
public procedure thereon are impracticable, unnecessary, or contrary to 
the public interest.'' \12\ The Commission notes that extending the 
expiration date of Rule 15Ba2-6T will not affect the substantive 
provisions of that rule, and will allow municipal advisors to continue 
to comply with the statutory registration requirement until a permanent 
registration regime becomes effective. Further, the Commission notes 
that extending the expiration date of Rule 15Ba2-6T will prevent a 
regulatory gap from developing between the time at which the temporary 
rule expires and at which municipal advisors must be registered with 
the Commission under a permanent registration regime. For these 
reasons, and the reasons discussed throughout this release, the 
Commission believes that there is good cause to extend the expiration 
date of Rule 15Ba2-6T to September 30, 2012, and to find that notice 
and solicitation of comment on the extension is impracticable, 
unnecessary, or contrary to the public interest.\13\
---------------------------------------------------------------------------

    \11\ See 5 U.S.C. 553(b).
    \12\ 5 U.S.C. 553(b)(B).
    \13\ This finding also satisfies the requirements of 5 U.S.C. 
808(2), allowing the rule amendments to become effective 
notwithstanding the requirements of 5 U.S.C. 801 (if a federal 
agency finds that notice and public comment are ``impracticable, 
unnecessary or contrary to the public interest,'' a rule ``shall 
take effect at such time as the Federal agency promulgating the rule 
determines''). Because the Commission is not publishing the rule 
amendments in a notice of proposed rulemaking, no analysis is 
required under the Regulatory Flexibility Act. See 5 U.S.C. 601(2) 
(for purposes of the Regulatory Flexibility Act, the term ``rule'' 
means any rule for which the agency publishes a general notice of 
proposed rulemaking).
---------------------------------------------------------------------------

    The APA also generally requires that an agency publish a 
substantive rule in the Federal Register not less than 30 days before 
its effective date.\14\ However, this requirement does not apply if the 
agency finds good cause and publishes such cause with the rule.\15\ For 
reasons similar to those explained above, the Commission finds good 
cause not to delay the effective date of the extension.
---------------------------------------------------------------------------

    \14\ See 5 U.S.C. 553(d).
    \15\ See 5 U.S.C. 553(d)(3).
---------------------------------------------------------------------------

    In connection with the adoption of Rule 15Ba2-6T and Form MA-T, the 
Commission submitted to the Office of Management and Budget (``OMB'') a 
request for approval of the ``collection of information'' requirements 
contained in the temporary rule and form in accordance with the 
Paperwork Reduction Act of 1995.\16\ OMB initially approved the 
collection of information on an emergency basis with an expiration date 
of March 31, 2011. The Commission subsequently submitted a request for 
extension of the approval, and OMB extended the approval to March 31, 
2014. The collection of information to which Rule 15Ba2-6T and Form MA-
T relates is ``Rule 15Ba2-6T and Form MA-T--Temporary Registration of 
Municipal Advisors.'' The OMB control number for the collection of 
information is 3235-0659. Since the Commission is not amending Rule 
15Ba2-6T or the disclosure requirements contained in Form MA-T other 
than extending the expiration date for Rule 15Ba2-6T, this amendment 
will not change the ``collection of information'' previously approved 
by the OMB.
---------------------------------------------------------------------------

    \16\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

    The Commission is sensitive to the costs and benefits of its rules. 
The Commission has previously considered and discussed the costs and 
benefits of Rule 15Ba2-6T.\17\ Since the Commission is not amending 
Rule 15Ba2-6T and Form MA-T other than to extend the expiration date 
for that rule, the Commission believes that the same general analysis 
will continue to apply for the period of the extension. An important 
benefit of extending the expiration date for Rule 15Ba2-6T, however, 
will be to allow municipal advisors to continue to comply with the 
statutory registration requirement until a permanent registration 
regime becomes effective, and to avoid a regulatory gap from developing 
between the time at which the temporary rule expires and at which 
municipal

[[Page 80735]]

advisors must be registered with the Commission under a permanent 
registration regime.
---------------------------------------------------------------------------

    \17\ For a detailed description of the costs and benefits of 
Rule 15Ba2-6T, see Interim Release, supra note 6 at 54474-75.
---------------------------------------------------------------------------

    Since the Commission is only extending the expiration date for Rule 
15Ba2-6T and is not substantively changing Rule 15Ba2-6T and Form MA-T, 
the Commission's estimated burden for each municipal advisor to 
complete and amend Form MA-T remains unchanged.\18\ However, the 
Commission estimates that as a result of the amendment, approximately 
162 \19\ new municipal advisors will register between January 1, 2012 
and September 30, 2012 at a total labor cost of approximately 
$168,000.\20\ With regard to the 162 new municipal advisors and the 
municipal advisors already registered pursuant to Rule 15Ba2-6T, the 
Commission estimates that, between January 1, 2012 and September 30, 
2012, there will be approximately 160 \21\ amendments and withdrawals 
at a total labor cost of approximately $22,000.\22\
---------------------------------------------------------------------------

    \18\ The Commission notes that in the Interim Release, it had 
estimated that approximately 1,000 municipal advisors would be 
required to complete Form MA-T. See Interim Release, supra note 6 at 
54473. It further conservatively estimated that all 1,000 municipal 
advisors would have to amend their forms once between September 1, 
2010 and December 31, 2011, recognizing that the actual number would 
likely be lower than 1,000. See id. As of November 31, 2011, the 
Commission has received 967 initial registrations, 102 amendments 
and 33 withdrawals.
    \19\ The Commission estimates that, between January 1, 2012 and 
September 30, 2012, there will be approximately 18 initial 
registrations per month, which is the average number of initial 
registrations the Commission has received per month during the first 
eleven months of 2011.
    \20\ 162 (estimated number of initial registrations) x 2.5 hours 
(estimated time to complete Form MA-T) = 405 hours; 405 hours x $273 
(hourly rate for a Compliance Manager) = $110,565. 162 (estimated 
number of new municipal advisors that will hire outside counsel) x 1 
hour (estimated time spent by outside counsel to help a new 
municipal advisor to comply with the rule) x $354 (hourly rate for 
an Attorney) = $57,348. $110,565 + $57,348 = $167,913. See Interim 
Release, supra note 6 at 54473-74. The estimated burden for each 
municipal advisor to complete Form MA-T and the estimated use of 
outside counsel by each municipal advisor remains unchanged from the 
Interim Release. The $273 per hour figure for a Compliance Manager 
and the $354 per hour figure for an Attorney are from SIFMA's 
Management & Professional Earnings in the Securities Industry 2010, 
modified by Commission staff to account for an 1,800-hour work year 
and multiplied by 5.35 to account for bonuses, firm size, employee 
benefits and overhead.
    \21\ The Commission estimated the number of amendments and 
withdrawals based on the number of amendments to, and withdrawals 
from, registration on Form MA-T that the Commission has received as 
of November 31, 2011.
    \22\ 160 (estimated number of amendments and withdrawals) x 0.5 
hours (estimated time to amend Form MA-T) = 80 hours; 80 hours x 
$273 (hourly rate for a Compliance Manager) = $21,840. See Interim 
Release, supra note 6 at 54473-74. The $273 per hour figure for a 
Compliance Manager is from SIFMA's Management & Professional 
Earnings in the Securities Industry 2010, modified by Commission 
staff to account for an 1,800-hour work year and multiplied by 5.35 
to account for bonuses, firm size, employee benefits and overhead.
---------------------------------------------------------------------------

    Section 3(f) of the Exchange Act requires the Commission, whenever 
it engages in rulemaking and is required to consider or determine 
whether an action is necessary or appropriate in the public interest, 
to consider, in addition to the protection of investors, whether the 
action would promote efficiency, competition and capital formation.\23\ 
In addition, Section 23(a)(2) of the Exchange Act requires the 
Commission, when making rules under the Exchange Act, to consider the 
impact such rules would have on competition.\24\ Section 23(a)(2) of 
the Exchange Act prohibits the Commission from adopting any rule that 
would impose a burden on competition not necessary or appropriate in 
furtherance of the purposes of the Exchange Act.\25\ In the Interim 
Release, the Commission considered the effects of Rule 15Ba2-6T on 
efficiency, competition, and capital formation.\26\ Since the 
Commission is not amending Rule 15Ba2-6T and Form MA-T other than 
extending the expiration date for Rule 15Ba2-6T, the Commission 
believes that the same analysis applies, and continues to believe that 
Rule 15Ba2-6T, as extended, will not result in a burden on competition 
not necessary or appropriate in furtherance of the purposes of the 
Exchange Act.
---------------------------------------------------------------------------

    \23\ See 15 U.S.C. 78c(f).
    \24\ See 15 U.S.C. 78w(a)(2).
    \25\ See id.
    \26\ See Interim Release, supra note 6 at 54475.
---------------------------------------------------------------------------

II. Statutory Authority and Text of Rule and Amendments

    Pursuant to the Exchange Act, and particularly Section 15B (15 
U.S.C. 78o-4), the Commission is amending Sec.  240.15Ba2-6T of Title 
17 of the Code of Federal Regulations in the manner set forth below.

List of Subjects in 17 CFR Part 240

    Reporting and recordkeeping requirements, Municipal advisors, 
Temporary registration requirements.

Text of Rule and Amendments

    For the reasons set out in the preamble, Title 17, Chapter II, of 
the Code of Federal Regulations is amended as follows.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
1. The general authority citation for Part 240 continues to read as 
follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78d, 78e, 78f, 78g, 78i, 
78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78o, 78o-4, 78p, 78q, 78s, 
78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 
80b-4, 80b-11, and 7201 et seq.; 18 U.S.C. 1350; and 12 U.S.C. 
5221(e)(3), unless otherwise noted.
* * * * *


Sec.  240.15Ba2-6T  [Amended]

0
2. In Sec.  240.15Ba2-6T, remove the words ``December 31, 2011'' 
wherever they appear and add, in their place, the words ``September 30, 
2012''.

    By the Commission.

    Dated: December 21, 2011.
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-33146 Filed 12-23-11; 8:45 am]
BILLING CODE 8011-01-P