WASHINGTON — The Municipal Securities Rulemaking Board has referred unregistered municipal advisors to the Securities and Exchange Commission for investigation and possible enforcement action, the board said Thursday.

In a letter to SEC chairman Mary Schapiro, MSRB chairman Alan Polsky, senior vice president at Dougherty & Co. in Minneapolis, expressed concern that firms are engaged in municipal advisory activities, but have not registered with the board or the commission, as required by federal law.

Registration and related rules help ensure that muni market professionals are bound by minimum standards of conduct, including a federal fiduciary duty, when providing advice to states and local governments, Polsky warned. That concern has prompted the board to share data about unregistered firms with the SEC, he added.

"In such instances, we transmit referrals of specific firms for which we have no record of registration to the commission for further investigation and possible enforcement action," Polsky wrote.

Polsky's letter did not say how many firms the MSRB has referred to the SEC, but information posted on the regulators' website sheds some light into possible registration discrepancies.

Since last September, almost 1,000 firms have registered with the SEC as muni advisors, according to data on the commission's website.

But as of Thursday, only about 725 firms have registered with the MSRB as muni advisors, the board's website shows.

An MSRB spokeswoman, Jennifer Galloway, declined to provide specifics, saying referrals are not public.

Polsky's remarks come as the SEC is working to finalize a municipal advisor-registration scheme and definition, slated for release by the end of the year, according to the commission's website. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, municipal advisors have been required to register with the SEC since Oct. 1, 2010. Muni advisors were also required to register with the MSRB by Dec. 31, 2010.

Four months ago, the board said it would refer registration violations to the appropriate regulator.

Thursday's missive is the first sign it has done so.

An independent advisor hailed the board's move.

"I think that's entirely appropriate," said Robert Doty, president of AGFS in Sacramento. "I would be surprised if they didn't do it."

Separately, Polsky's letter contained a two-page, single-spaced list of "traditional municipal advisory activities," saying the board thought the summary would be "useful" as the SEC finalizes its muni advisor definition and registration scheme.

For example, he said, traditional muni advisor activities include "strategic services," such as developing comprehensive financing plans, preparing models to review debt capacity constraints, analyzing financial feasibility and developing overall rating agency strategies.

"Transaction-related services," such as preparing investor road shows, assisting issuers with the selection of underwriters, and assisting issuers with negotiated and competitive bond sales are also traditional muni advisor activities, Polsky wrote.

In addition, the board told the SEC that traditional FA activities include derivatives services, such as strategic advice about the use of swaps, and "post-issuance services," such as monitoring secondary market activity, helping issuers with continuing disclosures, and monitoring reserve fund levels.

An industry group welcomed the MSRB's letter, citing its potential to clarify the difference between underwriting activities, which Dodd-Frank exempts from muni advisor registration and the fiduciary duty, and FA activities, which are not exempt. Attorneys who provide issuers with legal advice are also exempt.

"Hopefully, [the letter] helps inform the SEC in terms of the MSRB's perception of where to draw the line between advisors and non-advisors," said Michael Decker, managing director and co-head of the municipal securities division of the Securities Industry and Financial Markets Association.

In particular, Decker noted, the MSRB said underwriters may perform traditional FA activities in the course of their underwriting duties, including those the board labeled as "transaction-related services," without registering as muni advisors and becoming fiduciaries.

Polsky told the SEC that underwriters "appropriately perform" many transaction-related services that are "integrally related" to their professional responsibilities as underwriters.

Such conduct would be "consistent with the exception" for underwriters, he wrote.

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