Regulatory Update: Municipal Advisors – Temporary Conditional Exemption from the Broker Registration Requirements

The Temporary Conditional Exemptive Order [Release No. 34-89074] is intended to address disruption in the municipal securities markets as a result of COVID-19 and permits registered municipal advisors to solicit banks, their wholly-owned subsidiaries that are engaged in commercial lending and financing activities, and credit unions (“Qualified Providers”) in connection with direct placements of securities issued by their municipal issuer clients, subject to the requirements of the Order.  Note that the” direct placement of securities” is an activity that triggers broker-dealer registration requirements.

The Order permits a Registered Municipal Advisor to 1) engage in “Permitted Activities”—i.e., solicitation—of one or more Qualified Providers in connection with a potential Direct Placement of municipal securities by its Municipal Issuer client, and 2) receive transaction-based compensation for services provided in connection with that Direct Placement, without being required to register as a broker under Section 15(a) of the Exchange Act, so long as all of the conditions in this Order are met.

Read the full Order Granting a Temporary Conditional Exemption from the Broker Registration Requirements of Section 15(a) of the Securities Exchange Act of 1934 for Certain Activities of Registered Municipal Advisors: https://www.sec.gov/rules/exorders/2020/34-89074.pdf