The securities and investment community gave almost a half million dollars to a former freshman on the House Financial Services Committee who authored bills to restrict Dodd-Frank Act-mandated rules that would apply to municipal advisors and derivatives, according to data compiled by opensecrets.org.
Former Rep. Robert Dold, a Republican from Illinois who served just one term in Congress and lost his re-election bid in November 2012, raked in more than $463,000 in 2011 and 2012 from securities and investment groups, firms and individuals.
Dold was one of 61 members on the committee, but he took in the third highest amount of campaign contributions from this group. He was surpassed only by Rep. Scott Garrett, R-N.J., chair of the capital markets subcommittee who received $537,000, and Rep. Jim Himes, D-Conn., who got $515,000. Both of those lawmakers also authored derivatives and other bills that favored the securities industry.
Of the $463,000 given to Dold, more than $366,000 was from individuals and $98,000 was from political action committees. Dold was just one of five committee members to whom the Securities Industry and Financial Markets Association’s political action committee gave $10,000, the maximum allowable amount. Other lawmakers got lesser amounts.
Dold introduced a bill in August 2011 that would have significantly narrowed the firms and individuals that the Municipal Securities Rulemaking Board could regulate as municipal advisors firms.
The Dodd-Frank Act, enacted in July 2010, for the first time subjected municipal advisors to registration and regulatory oversight by the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. It also stipulated that all muni advisors would have a fiduciary duty to put their clients’ interests first, before their own. Dodd-Frank generally defined municipal advisors, but left a lot of discretion up to the regulators in following up.
The SEC, in its first run at registration rules, defined muni advisors broadly, drawing criticism from lawmakers and muni market participants. The commission, for example, suggested that appointed members of state and local government boards might be muni advisors. It received more than 1,000 comment letters mostly against the proposal.
Dold’s bill was an attempt to reign in that definition and was strongly supported by SIFMA and Bond Dealers of America. However, critics of the bill, which included the National Association of Independent Public Finance Advisors, complained the bill went overboard and would exempt too many as muni advisors, including swap advisors.
The House passed the bill in September 2012. Dold’s bill died with the loss of his re-election bid. But Rep. Steve Stivers, R-Ohio, a new member of Congress, introduced similar legislation in February.
