WASHINGTON — Rep. Steve Stivers, R.-Ohio, introduced a bill Friday that would define municipal advisors as those engaged with a municipal issuer to provide financial advice for compensation, with exceptions from the definition and its fiduciary duty for members of governmental boards, underwriters, bankers, swap dealers and those that provide related advice.
The bill, called the “Municipal Advisor Oversight Improvement Act,” was co-sponsored by Rep. Gwen Moore, D-Wis.
It is identical to a bill sponsored by former Rep. Robert Dold, R.-Ill, which passed the House last September but stalled in the Senate.
The bill is aimed at narrowing the Securities and Exchange Commission’s initial MA definition, which was released in 2010.
The SEC’s definition was called overly-broad by a range of market participants and criticized for bringing oversight to parties such as appointed members of government boards and firms and individuals that are already regulated, like underwriters.
The SEC has said it will complete its final MA definition in the first quarter of this year.
A statement released Friday from Rep. Stivers’ office said the bill clarifies the MA definition and would prevent market participants from facing “improper, duplicative, and onerous regulations under securities, banking, commodities, and other laws.”
“Washington needs to fix the mistake that Washington made, because it affects the rest of the country,” said the release.
Rep. Moore said in a statement that the bill is the “sort of common sense legislation will help us strike a fair balance between Wall Street and Main Street in relation to those advising institutions on municipal bonds.”
Though both Stivers’ and Dold’s bills had support from dealer groups like the Securities Industry and Financial Markets Association and Bond Dealers of America, others criticized it for releasing too many parties from the fiduciary duty required of MA’s by the Dodd-Frank Act.
Marcus Stanley, policy director for Americans for Financial Reform, said its “absurd” that the bill would exempt employees at big banks from a fiduciary duty.
“This shouldn’t even be a partisan issue,” said Stanley in comments earlier this week. “Municipalities hold money in trust for the taxpayers ... It’s critical that people putting these deals together have a fiduciary duty to taxpayers.”
SIFMA released a statement today thanking Stivers and Moore.
The SEC’s proposed rule “went far beyond the scope and authority Congress had intended,” said Kenneth Bentsen, SIFMA’s executive vice president of public policy and advocacy, in the release. “We urge Congress to quickly take up this legislation and pass it without delay.”
Earlier this week, BDA Senior Vice President for Government relations Susan Collet said the bill would be welcome and is needed to clarity underwriters’ obligations.
BDA and others have urged the SEC to complete its definition to bring oversight to a currently unregulated segment of the market.