[Federal Register Volume 77, Number 187 (Wednesday, September 26, 2012)]
[Rules and Regulations]
[Pages 59061-59064]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-23688]


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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 240 and 249

[Release No. 34-67901; File No. S7-19-10]
RIN 3235-AK69


Extension of Temporary Registration of Municipal Advisors

AGENCY: Securities and Exchange Commission.

ACTION: Final rule; extension.

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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 (and consequently Form MA-T) 
will sunset from September 30, 2012, to September 30, 2013. Under the 
amendment, all temporary registrations submitted pursuant to Rule 
15Ba2-6T also will expire no later than September 30, 2013.

DATES: Effective Date: September 30, 2012. The expiration of the 
effective period of interim final temporary Rule 15Ba2-6T (17 CFR 
240.15Ba2-6T) and Form MA-T (17 CFR 249.1300T) is delayed from 
September 30, 2012, to September 30, 2013.

FOR FURTHER INFORMATION CONTACT: Molly Kim, Senior Special Counsel, 
Office of Market Supervision, at (202) 551-5644; Yue Ding, Attorney-
Adviser, Office of Market Supervision, at (202) 551-5842; Mary N. 
Simpkins, Senior Special Counsel, Office of Municipal Securities, at 
(202) 551-5683; Dave Sanchez, Attorney Fellow, Office of

[[Page 59062]]

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, Commission, 100 F 
Street, NE., Washington, DC 20549-7010.

SUPPLEMENTARY INFORMATION: The Commission is extending the expiration 
date for interim final temporary Rule 15Ba2-6T and Form MA-T 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.
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    \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).
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    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.
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    \4\ 17 CFR 240.15Ba2-6T.
    \5\ 17 CFR 249.1300T.
    \6\ See Securities Exchange Act Release No. 62824 (September 1, 
2010), 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.
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    Under Rule 15Ba2-6T, as initially adopted, all temporary 
registrations submitted pursuant to that rule would have expired 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. Also, as 
initially adopted, Rule 15Ba2-6T itself would have expired on December 
31, 2011. On December 21, 2011, however, the Commission amended Rule 
15Ba2-6T to extend the date on which that rule and Form MA-T would 
sunset from December 31, 2011, to September 30, 2012.\8\ Accordingly, 
as amended, all temporary registrations submitted pursuant to Rule 
15Ba2-6T will expire no later than September 30, 2012. Further, 
existing Rule 15Ba2-6T will expire on September 30, 2012.
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    \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 (December 20, 2010), 
76 FR 824 (January 6, 2011) (``Proposing Release'').
    \8\ See Securities Exchange Act Release No. 66020 (December 21, 
2011), 76 FR 80733 (December 27, 2011) (``Extension Release''). In 
the Extension Release, the Commission inadvertently omitted a 
reference to Subpart N and 17 CFR 249.1300T in the ``Statutory 
Authority and Text of Rule and Amendments'' section. As such, 
Subpart N, which consists of 17 CFR 249.1300T, was deleted from the 
Code of Federal Regulations. On July 12, 2012, the Commission 
adopted a technical amendment to restore Subpart N and 249.1300T to 
Title 17 of the Code of Federal Regulations. See Securities Exchange 
Act Release No. 66020A (July 12, 2012), 77 FR 42176 (July 18, 2012).
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    As stated in the Interim Release and the Extension Release, the 
Commission believes that providing a temporary registration process for 
municipal advisors, pursuant to an interim final temporary rule, is 
necessary and appropriate, is consistent with the intent of Congress in 
enacting Section 975 of the Dodd-Frank Act, and can provide investors 
and municipal entities with basic and important information while the 
Commission considers a permanent registration program.\9\ As noted 
above, however, Rule 15Ba2-6T and Form MA-T, as extended, will expire 
on September 30, 2012. Accordingly, the Commission has determined that 
it is necessary and appropriate to extend the expiration date of Rule 
15Ba2-6T and Form MA-T to September 30, 2013.
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    \9\ See Interim Release, supra note 6, at 54466 and Extension 
Release, supra note 8, at 80733-34.
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    The extension will 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 that establishes another manner of registration of municipal 
advisors, prescribes a form for such purpose, and develops an 
electronic registration system. The 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 
the amendment to Rule 15Ba2-6T only to extend the expiration date of 
that rule and, consequently, the expiration date of Form MA-T. The 
Commission is not making any other amendments to Rule 15Ba2-6T or Form 
MA-T.
    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, 
2013. The Commission is also amending Rule 15Ba2-6T(f) to provide that 
the interim final temporary rule will expire on September 30, 2013. 
Thus, absent further action by the Commission, Rule 15Ba2-6T and Form 
MA-T will expire on September 30, 2013 at 11:59 p.m. Eastern Time.
    As previously noted in the Extension Release, the Commission has 
considered the seven comment letters received on the Interim Release 
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 
Rule 15Ba2-6T and Form

[[Page 59063]]

MA-T.\10\ Making other changes to the temporary registration regime 
could require municipal advisors relying on the temporary rule and form 
to make adjustments or amendments to their operations or forms that 
otherwise may be applicable only until the permanent regime becomes 
effective. 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.
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    \10\ See Extension Release, supra note 8, at 80734.
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    The amendments to Rule 15Ba2-6T will be effective on September 30, 
2012. 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 the temporary municipal advisor registration regime 
will not affect the substantive provisions of Rule 15Ba2-6T and Form 
MA-T. The extension will merely allow municipal advisors to continue to 
comply with the statutory registration requirement and thus continue to 
operate as municipal advisors until a permanent registration regime 
becomes effective. Extending the expiration date of Rule 15Ba2-6T and 
Form MA-T also will prevent a regulatory gap from developing between 
the temporary and permanent registration regimes. The extension, 
consequently, is designed to be temporally limited in scope until the 
Commission establishes a permanent registration regime for municipal 
advisors. 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 and Form MA-T to September 30, 2013 
and to find that notice and solicitation of comment on the extension is 
impracticable, unnecessary, or contrary to the public interest.\13\
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    \11\ See 5 U.S.C. 553(b).
    \12\ See 5 U.S.C. 553(b)(3)(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).
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    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.
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    \14\ See 5 U.S.C. 553(d).
    \15\ See 5 U.S.C. 553(d)(3).
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    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 to extend the expiration date for Rule 15Ba2-6T and Form MA-T, 
this amendment will not change the ``collection of information'' 
previously approved by the OMB.
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    \16\ 44 U.S.C. 3501 et seq.
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    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 and Form MA-T.\17\ Since the Commission is 
not amending Rule 15Ba2-6T and Form MA-T other than to extend the 
expiration date, the Commission believes that the same general analysis 
will continue to apply for the period of the extension. However, the 
Commission notes that allowing municipal advisors to continue to comply 
with the statutory registration requirement until a permanent 
registration regime becomes effective and preventing a regulatory gap 
from developing between the temporary and permanent registration 
regimes are important benefits.
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    \17\ For a detailed description of the costs and benefits of 
Rule 15Ba2-6T and Form MA-T, see Interim Release, supra note 6, at 
54474-75. See also Extension Release, supra note 8, at 80734-35.
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    Since the Commission is only extending the expiration date for Rule 
15Ba2-6T and Form MA-T and is not substantively changing them, 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 180 \19\ new 
municipal advisors will register between October 1, 2012, and September 
30, 2013, at a total labor cost of approximately $198,000.\20\ With 
regard to the 180 new municipal advisors and the municipal advisors 
already registered pursuant to Rule 15Ba2-6T, the Commission estimates

[[Page 59064]]

that, between October 1, 2012, and September 30, 2013, there will be 
approximately 96 \21\ amendments and withdrawals at a total labor cost 
of approximately $13,000.\22\
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    \18\ The Commission notes that in the Interim Release, it 
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. In the 
Extension Release, the Commission estimated that, as a result of the 
extension of Rule 15Ba2-6T and Form MA-T, approximately 162 new 
municipal advisors will register between January 1, 2012, and 
September 30, 2012, at a total labor cost of approximately $168,000. 
See Extension Release, supra note 8, at 80735. With regard to the 
162 new municipal advisors and the municipal advisors already 
registered pursuant to Rule 15Ba2-6T, the Commission estimated that, 
between January 1, 2012, and September 30, 2012, there will be 
approximately 160 amendments and withdrawals at a total labor cost 
of approximately $22,000. See id.
    \19\ The Commission estimates that, between October 1, 2012, and 
September 30, 2013, there will be approximately 15 initial 
registrations per month, which is the average number of initial 
registrations the Commission has received per month between January 
2011 and July 2012.
    \20\ 180 (estimated number of initial registrations) x 2.5 hours 
(estimated time to complete Form MA-T) = 450 hours; 450 hours x $279 
(hourly rate for a Compliance Manager) = $125,550. The $279 per hour 
figure for a Compliance Manager is from SIFMA's Management & 
Professional Earnings in the Securities Industry 2011, 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. 180 (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 $400 (hourly rate for outside legal services) = 
$72,000. This is based on an estimated $400 per hour cost for 
outside legal services. This is the same estimate used for the 
Commission's consolidated audit trail rule. See Securities Exchange 
Act Release No. 67457 (July 18, 2012), 77 FR 45722 (August 1, 2012). 
$125,550 + $72,000 = $197,550. 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.
    \21\ The Commission estimates the number of amendments and 
withdrawals based on the number of amendments to, and withdrawals 
from, registration on Form MA-T that the Commission received as of 
July 31, 2012. Specifically, between September 2010 and July 2012, 
the Commission received 192 amendments and withdrawals on Form MA-T, 
or an average of approximately 8 amendments and withdrawals each 
month. The Commission estimates that for the 12 months between 
October 1, 2012 and September 30, 2013, the Commission will continue 
to receive an average of 8 amendments and withdrawals each month, or 
96 amendments and withdrawals in total.
    \22\ 96 (estimated number of amendments and withdrawals) x 0.5 
hours (estimated time to amend Form MA-T) = 48 hours; 48 hours x 
$279 (hourly rate for a Compliance Manager) = $13,392. See Interim 
Release, supra note 6, at 54473-74. The estimated burden for each 
municipal advisor to complete an amended Form MA-T remains unchanged 
from the Interim Release. The $279 per hour figure for a Compliance 
Manager is from SIFMA's Management & Professional Earnings in the 
Securities Industry 2011, 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.
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    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\
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    \23\ See 15 U.S.C. 78c(f).
    \24\ See 15 U.S.C. 78w(a)(2).
    \25\ See id.
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    In the Interim Release, the Commission considered the effects of 
Rule 15Ba2-6T and Form MA-T on efficiency, competition, and capital 
formation.\26\ Since the Commission is not amending Rule 15Ba2-6T and 
Form MA-T other than to extend their expiration date, the Commission 
believes that the same analysis applies and continues to believe that 
Rule 15Ba2-6T and Form MA-T, as extended, will not result in a burden 
on competition not necessary or appropriate in furtherance of the 
purposes of the Exchange Act.
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    \26\ See Interim Release, supra note 6, at 54475.
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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 and 
restating Sec.  249.1300T of Title 17 of the Code of Federal 
Regulations in the manner set forth below.

List of Subjects in 17 CFR Parts 240 and 249

    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, 78c-3, 78d, 78e, 78f, 78g, 
78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 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, 12 
U.S.C. 5221(e)(3), and Sec. 939A, Pub. L. 111-203, 124 Stat. 1376, 
(2010), unless otherwise noted.
* * * * *


Sec.  240.15Ba2-6T  [Amended]

0
2. In Sec.  240.15Ba2-6T, remove the words ``September 30, 2012'' 
wherever they appear and add, in their place, the words ``September 30, 
2013''.
* * * * *

PART 249--FORMS, SECURITIES EXCHANGE ACT OF 1934

0
3. The authority citation for Part 249 continues to read in part as 
follows:

    Authority:  15 U.S.C. 78a et seq. and 7201 et seq.; and 18 
U.S.C. 1350, unless otherwise noted.
* * * * *

0
4. Subpart N, consisting of Sec.  249.1300T, continues to read as 
follows:

Subpart N--Forms for Registration of Municipal Advisors


Sec.  249.1300T  Form MA-T--For temporary registration as a municipal 
advisor, and for amendments to, and withdrawals from, temporary 
registration.

    The form shall be used for temporary registration as a municipal 
advisor, and for amendments to, and withdrawals from, temporary 
registration pursuant to Section 15B of the Exchange Act, (15 U.S.C. 
78o-4).
    [Note: The text of Form MA-T does not, and the amendments will not, 
appear in the Code of Federal Regulations.]

    By the Commission.

    Dated: September 21, 2012.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2012-23688 Filed 9-25-12; 8:45 am]
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