WASHINGTON — The House Financial Services Committee’s capital markets panel on Friday will hear testimony from nine witnesses representing dealers, state and local governments, and nonprofit organizations at a hearing on the Dodd-Frank Act’s impact on the municipal market.

The hearing comes as the Securities and Exchange Commission is preparing to release a report recommending legislative and regulatory changes to improve muni disclosure and price transparency.

Also slated to be released is a General Accountability Office report on disclosure in the municipal market, including recommendations on whether or not the so-called Tower Amendment should be repealed.

The Tower Amendment, which was added in 1975 to the Securities Exchange Act of 1934, bars the SEC and the Municipal Securities Rulemaking Board from requiring state and local governments to file documents with them before issuing muni securities.

But the hearing is expected to focus on municipal advisors and HR 2827, a bill introduced by Rep. Robert Dold, R-Ill. in August 2011, to limit the Dodd-Frank Act’s restrictions on municipal advisors.

The witness list, released Tuesday, includes Alan Polsky, chairman of the MSRB, but no one from the SEC. The SEC is the regulator that is determining how broadly the term municipal advisor is to be defined, a key point of controversy among lawmakers and market participants.

Under Dodd-Frank, enacted in July 2010, municipal advisors must register with the SEC and MSRB and comply with MSRB rules. The act subjects muni advisors to a fiduciary duty, meaning they must act in their clients best interests and put them ahead of their own. It also defines MAs to include solicitors, third-party guaranteed investment contract brokers, swap advisors, placement agents and others.

In 2010, the SEC issued temporary registration rules that considered broadening the definition of municipal advisors.

Several dozen lawmakers, including committee chairman Rep. Spencer Bachus, R-Ala, complained last year that the SEC’s proposed definition was so broad it could include unpaid appointed members of issuers’ governing boards, bankers, dealers and investment advisors.

The MSRB also urged the SEC to limit the definition of muni advisor so that it does not include any members of issuer governing boards, state bond banks or revolving funds. The MSRB had issued a series of drafts and proposals that would apply its rules to MAs, but withdrew them until the SEC finalizes its definition of municipal advisor. The SEC is not expected to finalize the registration rules and definition until later this year.

The Dold bill would limit the term municipal advisor to include only advisors who are formally engaged for work by an issuer and would exclude swap advisors, brokers, dealers, state-registered investment advisors, financial institutions and elected or appointed members of issuers’ governing bodies. It would also eliminate the fiduciary duty imposed on municipal advisors by Dodd-Frank.

Witnesses to testify at the hearing, besides Polsky, include: Robert Doty, a non-dealer municipal advisor and president of AGFS in Sacramento; Tim Firestine, chief administrative officer of Montgomery County, Md., and president-elect of the Government Finance Officers Association; Ken Gibbs, president of the municipal securities group at Jefferies & Co., representing the Securities Industry and Financial Markets Association; and Mike Marz, vice chairman of First Southwest, representing Bond Dealers of America.

Other witnesses include: Albert C. Kelly Jr., president and chief executive officer of SpiritBank and chairman of the American Bankers Association; Jim Geringer, chairman of the Association of Governing Boards of Universities and Colleges; Dr. Robert Brooks, professor of finance at the University of Alabama, and Christine H. Keck, director of government relations for Energy Systems Group, an energy services provider that specializes in developing sustainable energy solutions.

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