CHICAGO — The Securities and Exchange Commission will be hiring more staff for its office of municipal securities in the coming years, the new director of the office, John Cross, told bond lawyers meeting here.
In a mostly lighthearted speech made to several hundred lawyers at the National Association of Bond Lawyers’ Bond Attorney’s Workshop, Cross said differences between his new job at the SEC and his old post at the U.S. Treasury Department are “subtle.”
“Many things are the same,” he said. “It’s still municipal finance.”
Cross, former associate tax legislative counsel in the Treasury’s office of tax policy, joined the SEC on Sept. 24.
He noted that his remarks do not represent those of the commission or its staff.
One of the most notable differences between Treasury and the SEC are security procedures, according to Cross. The Secret Service, which Cross called a “no yucks bunch,” guards Treasury, and guests must provide their social security number to get in. As a result, “Most meetings start with about 20 minutes worth of security glitches to get people into the meeting,” Cross said.
But once in Treasury, “you could roam free. You could run all around the building.”
Compare that to the SEC: getting in is fairly easy, but you can’t wander the halls, Cross said, adding, “You’ve got to use your badge every five seconds to get into the elevator, to get into parts of the building.”
There are some similarities: both agencies use computer systems that require “about a hundred different security passwords,” Cross said. And both have “a superb professional staff.”
Cross also discussed a few weightier topics.
He reiterated that his office’s top priority is finalizing the definition of municipal advisor. The market has been operating under temporary MA registration rules since late 2010.
Cross said he hopes to present the rules to the SEC for consideration early next year.
He said the definition will address market participants’ concerns that the proposed rules, released in late 2010, were overly broad. Final rules will “draw clear lines and try to provide core protections by municipal issuers.”
Cross called a muni-advisor-related bill introduced by Rep. Robert Dold, R-Ill., a “fly in the ointment.”
That measure, which passed the House in September and has been referred to the Senate Banking Committee, was written to fix many of the perceived problems with the SEC’s initial muni advisor definition. It would define MAs as those engaged in muni advisory activities for compensation and would create exceptions for underwriters, bankers and swap dealers, as well as those that provide advice related to those activities.
Cross said the SEC’s will watch the legislative process, noting that the bill could affect how or when the agency implements its final rule. In a previous interview Cross said the bill, if it becomes law, could delay the SEC’s progress. He has said he would prefer if Congress delayed action on the legislation until the commission completes its rules, noting that the SEC will likely address many industry concerns in its final rules.
Cross told NABL members that his successor at Treasury has been picked, but that the agency hasn’t released that person’s name.
“My replacement at Treasury, who I hope is here in the room, is a wonderful, smart, energetic attorney with excellent practical judgment, who will do a fabulous job,” Cross said. “Unfortunately, it hasn’t been announced yet.”
Cross said the other priorities of the muni office are detailed in the SEC’s July 31 report on the municipal market, which Cross called a “roadmap.”
In the report, the SEC requests legislative authority to set the timing and content of issuers’ disclosures and recommends other regulatory options for improving disclosure. The report also recommends regulatory initiatives to improve pre-trade price transparency.
