WASHINGTON — John Cross will leave as director of the Securities and Exchange Commission's Office of Municipal Securities next month to replace Vicky Tsilas as the Treasury Department's associate tax legislative counsel, according to the SEC and sources. Tsilas said she plans to leave Treasury after a two-year stint to rejoin Ballard Spahr LLP in January.
Cross has served as the SEC's muni chief since the office became independent again in late 2012 under the Dodd-Frank Act. He oversaw the development of the SEC's municipal advisor registration rule. He will resume his previous post at Treasury.
"As the Office of Municipal Securities' first director, John provided valuable leadership and expertise in the oversight of the municipal securities market that is so vital to financing our public infrastructure," said SEC chair Mary Jo White. "John's efforts to promote investor protection and structural integrity in the municipal securities market and his contributions to building a top-notch office will help us continue to carry out our mission in this important area."
It is not clear whether the SEC would replace Cross with a current muni office official or with someone from outside the commission, though sources said at least two of the office members are qualified for the post. "It has been an honor and a privilege to serve chair White and the commission, and to work with the exceptional dedicated staff in the Office of Municipal Securities and throughout the agency," Cross said. "I really appreciated chair White's unwavering commitment to our efforts in the municipal securities area."
Tsilas joined Treasury's tax policy office as associate tax legislative counsel in 2012 when Cross left Treasury to join the SEC.
"I'm very excited to be rejoining Ballard Spahr," Tsilas said. "It is one of the premier public finance firms." This will be Tsilas third stint at Ballard, between jobs at the Internal Revenue Service and Treasury. She was an associate from 1999 to 2003, of counsel from 2008 to 2010 will be returning to the firm as a partner.
Market participants praised Cross for being an attentive listener and responding to their concerns about the municipal advisor rule following its release a year ago.
"The Bond Dealers of America has developed a strong working relationship with the SEC's Office of Municipal Securities under John Cross' leadership," said BDA chief executive officer Mike Nicholas. "We appreciate the time and focus John and his team spent on the development of FAQ's associated with the municipal advisor rule. We look forward to continuing to work with John's staff at the SEC on issues of importance to BDA member firms as well as with John on tax issues when he arrives back to Treasury."
Leslie Norwood, managing director, associate general counsel, and co-head of municipal securities at the Securities Industry and Financial Markets Association, said the muni office needs a new leader soon.
"We congratulate John on his new position and look forward to working with him in his new role at Treasury," Norwood said. "Moving forward, we believe it is critical to have a new director of the OMS appointed promptly given the pending and expected rule proposals from the SEC and Municipal Securities Rulemaking Board on municipal advisor regulation and market structure, which will have a significant impact on the municipal bond marketplace. The effective functioning of the municipal securities market is important to SIFMA members, as it is the key tool to finance this country's infrastructure needs."
Ben Watkins, chair of the governmental debt management committee at the Government Finance Officers Association, said he will miss Cross and hopes the next muni chief brings his same extensive muni market experience to the table. "I'm disappointed that John's leaving," he said. "He was a tremendous resource for the industry."
Paul Maco, a partner at Bracewell & Giuliani in Washington who formerly led the muni office, said that Cross' legacy will be his staff. The past year has seen the muni office swell with several new hires and reorganize through promotions. Maco said Cross had a big task in helming the muni office through the MA rulemaking, a mammoth and controversial task.
"He took on a complicated task and did a great job with a tough situation," Maco said.
National Association of Municipal Advisors president Terri Heaton praised Cross' work. "John's contributions and leadership worked to protect the public trust and better the municipal securities industry. He asked insightful questions, sought the opinions of all market participants, and then worked to develop and implement a municipal advisor regulatory regime designed to protect the interests of issuers and investors and to promote a more robust and transparent municipal securities marketplace. NAMA wishes John the best in his return to Treasury."
"I believe his service to the SEC will be distinguished by the tenants of integrity, professionalism, and absolute commitment to the public trust," added Larry Kidwell, a muni advisor and president at Kidwell & Company.
Chas Cardall, a tax partner at Orrick, Herrington & Sutcliffe in San Francisco, said that it is good that the Treasury position will not be sitting vacant. He added that Cross is "somebody everyone's always thought very highly of."
Tom Vander Molen, a partner at Dorsey & Whitney in Minneapolis, pointed out that Cross was trained as a tax lawyer. "Those are his roots," Vander Molen said.
Bill Daly, director of governmental affairs for the National Association of Bond Lawyers, said, "Wherever John Cross is, he's going to make a great contributor."
"The industry will be sorry to lose Vicky, but we will be happy to have John back," said Perry Israel, a lawyer with his own practice in Sacramento, Calif.
"It's all good news for us," said Bill Rhodes, head of Ballard's public finance department.
"I'm very anxious to have her return," said Linda Schakel, a partner at Ballard who added that Tsilas has done an "excellent job" at Treasury.
