WASHINGTON - Dealer groups say they have many unanswered questions about the Securities and Exchange Commission's registration rule for municipal advisors, which is to take effect in five months.
Representatives from the Securities Industry and Financial Markets Association and Bond Dealers of America spoke to members of the Government Finance Officers Committee on Governmental Debt Management in a session that was closed to the press during the group's annual winter meeting here.
Michael Decker, managing director and co-head of municipal securities spoke for SIFMA, while managing director and head of public finance services Frank Fairman of Piper Jaffray spoke for BDA. Also addressing the group was Steve Apfelbacher, a financial advisor and president at Ehlers Investment Partners who spoke for the National Association of Independent Public Finance Advisors.
But representatives of three groups, who offered to speak to The Bond Buyer in interviews after the meeting said the three speakers tried to dispel rumors about the MA rule while also giving issuers their perspectives.
Decker told the group that despite the SEC's Jan. 10 publication of additional guidance on the MA rule, SIFMA has a number of concerns that remain unaddressed.
"There are still a lot of open questions," he told The Bond Buyer after his presentation. "What steps are dealers going to have to take to comply with the rule?"
Decker said he highlighted some of those questions, such as what it truly means to "rely on" the advice of an MA under a provision in the rule that allows municipalities to accept outside recommendations more freely from anyone, including dealers, if they have their own adviser who is not associated with any of other firms offering advice.
Decker added that SIFMA is working on model documentation for MA compliance.
"We and the issuers, we're in implementation mode," he said.
Susan Collet, senior vice president of government relations relayed the highlights of Fairman's closed-door presentations. "We're all working on adapting," she said. "There are definitely little things cropping up on the radar."
BDA has some of the same concerns as SIFMA, such as the "rely on" language in the independent MA exemption from registration, she said.
SEC muni chief John Cross said in an earlier session that was opened up to the press at his request, that "rely on" does not mean an issuer must always follow the advice of its MA, but rather that the issuer is receiving advice from a party with a fiduciary duty to put the issuer's interests ahead of its own.
Collet said BDA will be eager to get additional guidance that Cross said would be out before July 1.
NAIPFA, which has repeatedly attempted to rebut dealer claims that the MA rule might inhibit communication between issuers and their underwriters, used the committee meeting to dispel what its members believe are common myths about the rule. NAIPFA, for example, pointed out that is not true that the rule requires all issuers to hire MAs or that the exemptions allowing underwriters to speak more fulsomely to issuers will be difficult to use.
The Bond Buyer attempted to convince GFOA leaders to open the entire debt committee meeting to the public, but this session remained closed despite the protest.
