SEC Office of Municipal Securities Issues FAQs for Registration of Municipal Advisors

The U.S. Securities and Exchange Commission has published an update to its frequently asked questions (FAQs) as regards the registration and registration requirements of „Municipal Securities Advisors“. Specifically, the Commission has added an entirely new section, section 18 entitled „COMPLETION OF FORM MA, FORM MA-I, AND FORM MA-NR“, with the following questions – as cited:
Question 18.1: What Constitutes “Prompt” Filing of Required Forms for Purposes of Securities Exchange Act Rules 15Ba1-5 (“Amendments to Form MA and Form MA-I”) and 15Ba1-6 (“Consent To Service Of Process To Be Filed By Non-Resident Municipal Advisors; Legal Opinion To Be Provided By Non-Resident Municipal Advisors”)?
Answer: Staff believes that a registrant generally should meet the “prompt” filing requirement under Exchange Act Rules 15Ba1-5 and 15Ba1-6 by filing required forms (or form amendments) within 30 calendar days of the event requiring such filing unless a more specific time period has been identified in the rule (such as “within 90 days of the end of a registered municipal advisor’s fiscal year”). The Exchange Act and the Exchange Act rules do not define “prompt” for purposes of the rule for the registration of municipal advisors.
Several of the rules require municipal advisor firms to file forms (and form amendments) within certain timeframes. Exchange Act Rule 15Ba1-5(a) requires a registered municipal advisor to “promptly” amend the information contained in its Form MA, “(1) at least annually within 90 days of the end of a registered municipal advisor’s fiscal year, or the end of the calendar year for a sole proprietor; and (2) more frequently, if required by the General Instructions (17 CFR 249.1300), as applicable.” Exchange Act Rule 15Ba1-5(b) requires a registered municipal advisor to promptly amend Form MA-I whenever the information contained in the form becomes inaccurate for any reason. Rule 15Ba1-6 requires prompt filing of a new Form MA-NR and prompt appointment of successor agents under certain circumstances.
In the staff’s view, this 30-calendar day filing timeframe for all required forms (or form amendments) under Exchange Act Rules 15Ba1-5 and 15Ba1-6 (unless a more specific time period has been identified) is generally consistent with the Commission’s instructions that require a registered municipal advisor to report other changes to its forms within 30 calendar days. For example:
1. “Instruction 1(a)” to the “Specific Instructions for Certain Items in Form MA” provides that Successions by Application must be submitted “within 30 calendar days after the succession.”
2. “Instruction 1(b)” to the “Specific Instructions for Certain Items in Form MA” provides that Successions by Amendment must be submitted “within 30 calendar days after the change or reorganization.”
3. “Instruction 3” to the “General Instructions to Form MA-NR” provides that a SEC-registered municipal advisory firm that becomes a non-resident after the municipal advisor firm’s initial application has been submitted must file a Form MA-NR within 30 days of becoming a non-resident. “Instruction 3” to the “General Instructions to Form MA-NR” provides that a municipal advisory firm must file a Form MA-NR within 30 days of its general partner or managing agent becoming a non-resident.
4. “Instruction 3” to the “General Instructions to Form MA-NR” provides that a municipal advisory firm must file Form MA-NR within 30 days of the date that a non-resident becomes a general partner or managing agent of a municipal advisory firm if this occurs after the firm initially registers on Form MA.
5. “Instruction 3” to the “General Instructions to Form MA-NR” provides that a municipal advisory firm must file Form MA-NR within 30 days of a non-resident natural person becoming associated with the firm and engaging in municipal advisory activities on the firm’s behalf. [March 20, 2023]
Question 18.2: For Purposes of Item 4 of the Form MA-I, Does the Municipal Advisor Have to Include Other Current Employment of the Individual Associated with the Municipal Advisor that is the Subject of the Form MA-I When Completing that Individual’s Employment History if the Municipal Advisor Has Already Included the Individual’s Current Employment with the Municipal Advisor Firm that is Filing the Form MA-I in Item 1-B of the Form MA-I?
Answer: Yes. Item 4 requires a municipal advisor to disclose a “complete employment history” of the associated person for the past ten years “including full and part-time employment, self-employment, military service, and homemaking.” There is no provision for excluding concurrent employment. All employment, including employment that overlaps with the individual’s current employment with the municipal advisor, is required to be disclosed. The form requires the municipal advisor to account for all time periods during the past ten years, meaning that Item 4 must not include any time gaps between employment entries (e.g., educational activities and/or periods between employment must be listed). [March 20, 2023]
Question 18.3: For Purposes of Item 5 (Other Business) of the Form MA-I, Does the Municipal Advisor Have to Include Current Employment of the Associated Person that Has Already Been Disclosed in Item 4 (Employment History) of Form MA-I?
Answer: Yes. To the extent that any portion of the individual’s employment history would meet the conditions requiring disclosure in Item 5 of Form MA-I, the municipal advisor must disclose that employment information in Item 5 of Form MA-I. This requirement applies notwithstanding the fact that this information may otherwise already be disclosed in Item 4 of the Form MA-I or any other portion of the Form MA-I or the municipal advisor firm’s Form MA. [March 20, 2023]
Question 18.4: For Purposes of Item 4 or Item 5 of the Form MA-I, Does a Municipal Advisor Have to Disclose if an Associated Person is Employed by or Otherwise Associated with an Affiliate of the Municipal Advisor Firm that is Filing the Form MA-I?
Answer: Yes. If an individual is simultaneously employed by or otherwise associated with a separate but affiliated firm of a municipal advisor, such association must be disclosed in Item 4 of the Form MA-I as part of the employment history of the individual and also disclosed in Item 5 if that individual would be currently engaged in other business as either a proprietor, partner, officer, director, employee, trustee, agent or otherwise. The fact that the work is being performed for an affiliate of the municipal advisor firm that is filing the Form MA-I does not affect the requirement for this employment information to be disclosed on the Form MA-I. [March 20, 2023]
Question 18.5: For Purposes of Item 1-G of Form MA, is the Identification of the Chief Compliance Officer Optional?
Answer: No. Although the Commission indicated in the Adopting Release that a municipal advisor applicant must provide the name and contact information for only one person on Items 1-G and 1-H (either a Chief Compliance Officer in Item 1-G or another contact person in Item 1-H), the Commission subsequently approved MSRB Rule G-44(c). MSRB Rule G-44(c) requires each municipal advisor to designate an individual to serve as its Chief Compliance Officer. Therefore, in the staff’s view, each municipal advisor should provide the name and contact information of its Chief Compliance Officer in Item 1-G of Form MA, even if that is the same name disclosed in Item I-H. The full name of the Chief Compliance Officer must also be disclosed in Schedule A-2 of Form MA. [March 20, 2023]
Question 18.6: For Purposes of Item 6-A(20) Of Form MA, Regarding the Financial Industry and Other Activities of Associated Persons, in what Circumstances Should A Municipal Advisor Check the Box for “Other Municipal Advisor?”
Answer: Item 6 of Form MA seeks information regarding the financial industry and other activities of associated persons of the municipal advisor “other than those that relate to their association” with the municipal advisor. As provided in the instructions to Form MA, the term “person” includes an individual, sole proprietorship, or a firm. A firm includes any partnership, corporation, trust, limited liability company, limited liability partnership, or other organization. For that reason, Item 6-A(20) of Form MA should only be checked if an associated person of the municipal advisor is a municipal advisor, or works for, or is otherwise affiliated with, a municipal advisor other than the municipal advisor that is the subject of the Form MA being completed.
For example, some associated persons of a municipal advisor may work for more than one municipal advisory firm. A municipal advisory firm that has such an associated person would check the box in Item 6-A of Form MA indicating that it has an associated person affiliated with an “other municipal advisor” and complete the applicable portions of Section 6 of Schedule D to the Form MA. Item 6-A of Form MA should not be checked for individuals who are affiliated with only the municipal advisor that is the subject of the Form MA being completed. [March 20, 2023]
Question 18.7: Should a Municipal Advisor Include Social Security Numbers and Other Personally Identifiable Information (PII) in Completing Municipal Advisor Forms?
Answer: No. Effective May 14, 2018, the Commission amended Form MA and Form MA-I to eliminate portions of the forms that request filers to provide certain PII, including Social Security numbers, dates of birth, or Foreign ID numbers. [March 20, 2023]
Question 18.8: How Does One Locate a Municipal Advisor’s Filings that Have Been Accepted by the Commission?
Answer: Municipal advisor filings accepted by the Commission can be located by searching the municipal advisor name under “Company Filings” on the Commission’s website at www.sec.gov. Using this search, members of the public can see what municipal advisor filings have previously been accepted and locate accession numbers for previous filings. [March 20, 2023]