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United States Code (Last Updated: May 24, 2014) |
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Title 15. COMMERCE AND TRADE |
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Chapter 2B. SECURITIES EXCHANGES |
§ 78o–4. Municipal securities
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(a) Registration of municipal securities dealers (1) (A) It shall be unlawful for any municipal securities dealer (other than one registered as a broker or dealer under section 78o of this title) to make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce or attempt to induce the purchase or sale of, any municipal security unless such municipal securities dealer is registered in accordance with this subsection. (B) It shall be unlawful for a municipal advisor to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person, unless the municipal advisor is registered in accordance with this subsection. (2) A municipal securities dealer or municipal advisor may be registered by filing with the Commission an application for registration in such form and containing such information and documents concerning such municipal securities dealer or municipal advisor and any persons associated with such municipal securities dealer or municipal advisor as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors. Within forty-five days of the date of the filing of such application (or within such longer period as to which the applicant consents), the Commission shall— (A) by order grant registration, or (B) institute proceedings to determine whether registration should be denied. Such proceedings shall include notice of the grounds for denial under consideration and opportunity for hearing and shall be concluded within one hundred twenty days of the date of the filing of the application for registration. At the conclusion of such proceedings the Commission, by order, shall grant or deny such registration. The Commission may extend the time for the conclusion of such proceedings for up to ninety days if it finds good cause for such extension and publishes its reasons for so finding or for such longer period as to which the applicant consents. The Commission shall grant the registration of a municipal securities dealer or municipal advisor if the Commission finds that the requirements of this section are satisfied. The Commission shall deny such registration if it does not make such a finding or if it finds that if the applicant were so registered, its registration would be subject to suspension or revocation under subsection (c) of this section. (3) Any provision of this chapter (other than section 78e of this title or paragraph (1) of this subsection) which prohibits any act, practice, or course of business if the mails or any means or instrumentality of interstate commerce is used in connection therewith shall also prohibit any such act, practice, or course of business by any registered municipal securities dealer or municipal advisor or any person acting on behalf of such municipal securities dealer or municipal advisor, irrespective of any use of the mails or any means or instrumentality of interstate commerce in connection therewith. (4) The Commission, by rule or order, upon its own motion or upon application, may conditionally or unconditionally exempt any broker, dealer, municipal securities dealer, or municipal advisor, or class of brokers, dealers, municipal securities dealers, or municipal advisors from any provision of this section or the rules or regulations thereunder, if the Commission finds that such exemption is consistent with the public interest, the protection of investors, and the purposes of this section. (5) No municipal advisor shall make use of the mails or any means or instrumentality of interstate commerce to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products, the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person, in connection with which such municipal advisor engages in any fraudulent, deceptive, or manipulative act or practice. (b) Municipal Securities Rulemaking Board; rules and regulations (1) The Municipal Securities Rulemaking Board shall be composed of 15 members, or such other number of members as specified by rules of the Board pursuant to paragraph (2)(B),, of subparagraph (A); and (C) does not include a broker, dealer, or municipal securities dealer serving as an underwriter (as defined in section 77b(a)(11) of this title), any investment adviser registered under the Investment Advisers Act of 1940 [15 U.S.C. 80b–1 et seq.], or persons associated with such investment advisers who are providing investment advice, any commodity trading advisor registered under the Commodity Exchange Act [7 U.S.C. 1 et seq.] or persons associated with a commodity trading advisor who are providing advice related to swaps, attorneys offering legal advice or providing services that are of a traditional legal nature, or engineers providing engineering advice; (5) the term “municipal financial product” means municipal derivatives, guaranteed investment contracts, and investment strategies; (6) the term “rules of the Board” means the rules proposed and adopted by the Board under subsection (b)(2); (7) the term “person associated with a municipal advisor” or “associated person of an advisor” means— (A) any partner, officer, director, or branch manager of such municipal advisor (or any person occupying a similar status or performing similar functions); (B) any other employee of such municipal advisor who is engaged in the management, direction, supervision, or performance of any activities relating to the provision of advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities; and (C) any person directly or indirectly controlling, controlled by, or under common control with such municipal advisor; (8) the term “municipal entity” means any State, political subdivision of a State, or municipal corporate instrumentality of a State, including— (A) any agency, authority, or instrumentality of the State, political subdivision, or municipal corporate instrumentality; (B) any plan, program, or pool of assets sponsored or established by the State, political subdivision, or municipal corporate instrumentality or any agency, authority, or instrumentality thereof; and (C) any other issuer of municipal securities; (9) the term “solicitation of a municipal entity or obligated person” means a direct or indirect communication with a municipal entity or obligated person made by a person, for direct or indirect compensation, on behalf of a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser (as defined in section 202 of the Investment Advisers Act of 1940 [15 U.S.C. 80b–2]) that does not control, is not controlled by, or is not under common control with the person undertaking such solicitation for the purpose of obtaining or retaining an engagement by a municipal entity or obligated person of a broker, dealer, municipal securities dealer, or municipal advisor for or in connection with municipal financial products, the issuance of municipal securities, or of an investment adviser to provide investment advisory services to or on behalf of a municipal entity; and (10) the term “obligated person” means any person, including an issuer of municipal securities, who is either generally or through an enterprise, fund, or account of such person, committed by contract or other arrangement to support the payment of all or part of the obligations on the municipal securities to be sold in an offering of municipal securities.
References In Text
This chapter, referred to in subsecs. (a)(3), (b)(2), (7), (c)(6)(C), (8), and (d), was in the original “this title”. See References in Text note set out under section 78a of this title.
Section 78o–3(b)(7) of this title, referred to in subsec. (c)(9)(B), was in the original “section 15A(7)”, and was translated as meaning section 15A(b)(7) of act
The Investment Advisers Act of 1940, referred to in subsec. (e)(4)(C), is title II of act Aug. 22, 1940, ch. 686, 54 Stat. 847, which is classified generally to subchapter II (§ 80b–1 et seq.) of chapter 2D of this title. For complete classification of this Act to the Code, see section 80b–20 of this title and Tables.
The Commodity Exchange Act, referred to in subsec. (e)(4)(C), is act Sept. 21, 1922, ch. 369, 42 Stat. 998, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables.
Amendments
2010—Subsec. (a)(1). Pub. L. 111–203, § 975(a)(1), designated existing provisions as subpar. (A) and added subpar. (B).
Subsec. (a)(2), (3). Pub. L. 111–203, § 975(a)(2), (3), inserted “or municipal advisor” after “municipal securities dealer” wherever appearing.
Subsec. (a)(4). Pub. L. 111–203, § 975(a)(4), substituted “dealer, municipal securities dealer, or municipal advisor, or class of brokers, dealers, municipal securities dealers, or municipal advisors” for “dealer, or municipal securities dealer or class of brokers, dealers, or municipal securities dealers”.
Subsec. (a)(5). Pub. L. 111–203, § 975(a)(5), added par. (5).
Subsec. (b)(1). Pub. L. 111–203, § 975(b)(1)(C), which directed amendment of third sentence by striking out “initial”, was executed in fourth sentence by striking out “initial” after “office of the” and after “such”, to reflect the probable intent of Congress.
Pub. L. 111–203, § 975(b)(1)(B), added second and third sentences and struck out former second sentence which read as follows: “The initial members of the Board shall serve as members for a term of two years, and shall consist of (A) five individuals who are not associated with any broker, dealer, or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker or municipal securities dealer), at least one of whom shall be representative of investors in municipal securities, and at least one of whom shall be representative of issuers of municipal securities (which members are hereinafter referred to as ‘public representatives’); (B) five individuals who are associated with and representative of municipal securities brokers and municipal securities dealers which are not banks or subsidiaries or departments or divisions of banks (which members are hereinafter referred to as ‘broker-dealer representatives’); and (C) five individuals who are associated with and representative of municipal securities dealers which are banks or subsidiaries or departments or divisions of banks (which members are hereinafter referred to as ‘bank representatives’).”
Pub. L. 111–203, § 975(b)(1)(A), in first sentence, substituted “The Municipal Securities Rulemaking Board shall be composed of 15 members, or such other number of members as specified by rules of the Board pursuant to paragraph (2)(B),” for “Not later than one hundred twenty days after
Subsec. (b)(2). Pub. L. 111–203, § 975(b)(2)(A), in introductory provisions, inserted “and advice provided to or on behalf of municipal entities or obligated persons by brokers, dealers, municipal securities dealers, and municipal advisors with respect to municipal financial products, the issuance of municipal securities, and solicitations of municipal entities or obligated persons undertaken by brokers, dealers, municipal securities dealers, and municipal advisors” before period at end of first sentence and struck out “(Such rules are hereinafter collectively referred to in this chapter as ‘rules of the Board’.)” before “The rules”.
Subsec. (b)(2)(A). Pub. L. 111–203, § 975(b)(2)(B), in introductory provisions, inserted “, and no broker, dealer, municipal securities dealer, or municipal advisor shall provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities,” after “sale of, any municipal security” and “and municipal entities or obligated persons” after “protection of investors”, in cl. (i), substituted “municipal securities brokers, municipal securities dealers, and municipal advisors” for “municipal securities brokers and municipal securities dealers” in two places, in cl. (ii), inserted “and” at end, in cl. (iii), substituted period for “; and” at end, and struck out cl. (iv) which read as follows: “provide that persons in any such class other than municipal securities brokers and municipal securities dealers and partners, officers, and supervisory employees of municipal securities brokers or municipal securities dealers, may be qualified solely on the basis of compliance with such standards of training and such other qualifications as the Board finds appropriate.”
Subsec. (b)(2)(B). Pub. L. 111–203, § 975(b)(2)(C), amended subpar. (B) generally. Prior to amendment, subpar. (B) read as follows: “establish fair procedures for the nomination and election of members of the Board and assure fair representation in such nominations and elections of municipal securities brokers and municipal securities dealers. Such rules shall provide that the membership of the Board shall at all times be equally divided among public representatives, broker-dealer representatives, and bank representatives, and that the public representatives shall be subject to approval by the Commission to assure that no one of them is associated with any broker, dealer, or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker or municipal securities dealer) and that at least one is representative of investors in municipal securities and at least one is representative of issuers of municipal securities. Such rules shall also specify the term members shall serve and may increase the number of members which shall constitute the whole Board provided that such number is an odd number.”
Subsec. (b)(2)(C). Pub. L. 111–203, § 975(b)(2)(D), inserted “and municipal financial products” after “municipal securities” the first two places appearing and “, municipal entities, obligated persons,” after “to protect investors” and substituted “among customers, municipal entities, obligated persons, municipal securities brokers, municipal securities dealers, or municipal advisors,” for “between customers, issuers, municipal securities brokers, or municipal securities dealers,” and “brokers, municipal securities dealers, or municipal advisors, to regulate” for “brokers or municipal securities dealers, to regulate”.
Subsec. (b)(2)(D). Pub. L. 111–203, § 975(b)(2)(E), inserted “and advice concerning municipal financial products” after “transactions in municipal securities” and “municipal advisor,” before “or person associated” and substituted “that no” for “That no” and “a municipal securities broker, municipal securities dealer, or municipal advisor may be compelled” for “a municipal securities broker or municipal securities dealer may be compelled”.
Subsec. (b)(2)(E). Pub. L. 111–203, § 975(b)(2)(F), substituted “municipal securities brokers, municipal securities dealers, and municipal advisors” for “municipal securities brokers and municipal securities dealers” and “municipal securities broker, municipal securities dealer, or municipal advisor” for “municipal securities broker or municipal securities dealer”.
Subsec. (b)(2)(G). Pub. L. 111–203, § 975(b)(2)(G), substituted “municipal securities brokers, municipal securities dealers, and municipal advisors” for “municipal securities brokers and municipal securities dealers”.
Subsec. (b)(2)(J). Pub. L. 111–203, § 975(b)(2)(H), substituted “each municipal securities broker, municipal securities dealer, and municipal advisor” for “each municipal securities broker and each municipal securities dealer” and inserted “, which may include charges for failure to submit to the Board, or to any information system operated by the Board, within the prescribed timeframes, any items of information or documents required to be submitted under any rule issued by the Board” after “such fees and charges”.
Subsec. (b)(2)(K). Pub. L. 111–203, § 975(b)(2)(I), substituted “a related account of a broker, dealer, or municipal securities dealer” for “a municipal securities investment portfolio” and substituted “any broker, dealer, or municipal securities dealer” for “any municipal securities dealer” in two places.
Subsec. (b)(2)(L). Pub. L. 111–203, § 975(b)(2)(J), added subpar. (L).
Subsec. (b)(3) to (5), (7). Pub. L. 111–203, § 975(b)(3), (4), added pars. (3) to (5) and redesignated former par. (3) as (7).
Subsec. (c)(1). Pub. L. 111–203, § 975(c)(1), (2), inserted “, and no broker, dealer, municipal securities dealer, or municipal advisor shall make use of the mails or any means or instrumentality of interstate commerce to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products, the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person,” after “any municipal security” and inserted at end “A municipal advisor and any person associated with such municipal advisor shall be deemed to have a fiduciary duty to any municipal entity for whom such municipal advisor acts as a municipal advisor, and no municipal advisor may engage in any act, practice, or course of business which is not consistent with a municipal advisor’s fiduciary duty or that is in contravention of any rule of the Board.”
Subsec. (c)(2). Pub. L. 111–203, § 975(c)(3), inserted “or municipal advisor” after “municipal securities dealer” in two places.
Subsec. (c)(3). Pub. L. 111–203, § 975(c)(4), inserted “or municipal entities or obligated person” after “protection of investors” in two places and “or municipal advisor” after “municipal securities dealer” wherever appearing.
Subsec. (c)(4). Pub. L. 111–203, § 975(c)(5), which directed amendment of par. (4) by inserting “or municipal advisor” after “municipal securities dealer or obligated person” each place that term appears, could not be executed because such term does not appear.
Pub. L. 111–203, § 925(a)(2), substituted “12 months or bar any such person from being associated with a broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization,” for “twelve months or bar any such person from being associated with a municipal securities dealer,”.
Subsec. (c)(6)(B). Pub. L. 111–203, § 975(c)(6), inserted “or municipal entities or obligated person” after “protection of investors”.
Subsec. (c)(7)(A)(iii). Pub. L. 111–203, § 975(c)(7)(A), added cl. (iii).
Subsec. (c)(7)(B). Pub. L. 111–203, § 975(c)(7)(B), inserted “or municipal entities or obligated person” after “protection of investors”.
Subsec. (c)(8). Pub. L. 111–203, § 929F(a), substituted “any person who is, or at the time of the alleged violation or abuse was, a member or employee” for “any member or employee”.
Subsec. (c)(9). Pub. L. 111–203, § 975(c)(8), added par. (9).
Subsec. (d)(2). Pub. L. 111–203, § 975(d)(2), which directed amendment of par. (2) by inserting “or municipal advisors” before “to furnish”, was executed by making the insertion before “to furnish” the second place appearing, to reflect the probable intent of Congress.
Pub. L. 111–203, § 975(d)(1), substituted “through a municipal securities broker, municipal securities dealer, municipal advisor, or otherwise” for “through a municipal securities broker or municipal securities dealer or otherwise”.
Subsec. (e). Pub. L. 111–203, § 975(e), added subsec. (e).
2002—Subsec. (c)(2), (4). Pub. L. 107–204 substituted “, or is subject to an order or finding,” for “or omission” and “(H), or (G)” for “or (G)”.
1998—Subsec. (c)(4). Pub. L. 105–353 substituted “convicted of any offense” for “convicted by any offense” in first sentence.
1990—Subsec. (c)(2), (4). Pub. L. 101–550 substituted “(A), (D), (E), or (G)” for “(A), (D), or (E)”.
Subsec. (c)(6)(A). Pub. L. 101–429 substituted “, the nature” for “and the nature” and “proposed action, and whether the Commission is seeking a monetary penalty against such municipal securities dealer or such associated person pursuant to section 78u–2 of this title; and” for “proposed action and”.
1987—Subsec. (b)(2)(C). Pub. L. 100–181, § 318, substituted “municipal securities dealers, to regulate” for “municipal security dealers, to regulate” “purposes of this chapter” for “purposes of this chapter or the securities”, and “burden on competition” for “burden or competition”.
Subsec. (c)(4). Pub. L. 100–181, § 319, substituted new first sentence for former first sentence which read as follows: “The Commission, by order, shall censure any person associated, or seeking to become associated with, a municipal securities dealer or suspend for a period not exceeding twelve months or bar any such person from being associated with a municipal securities dealer, if the Commission finds, on the record after notice and opportunity for hearing, that such censure, suspension, or bar is in the public interest and that such person has committed or omitted any act or omission enumerated in subparagraph (A), (D), or (E) of paragraph (4) of section 78o(b) of this title, has been convicted of any offense specified in subparagraph (B) of such paragraph (4) within ten years of the commencement of the proceedings under this paragraph, or is enjoined from any action, conduct, or practice specified in subparagraph (C) of such paragraph (4).”
Subsec. (c)(6)(A). Pub. L. 100–181, § 320, substituted “Board” for “board”.
1983—Subsec. (b)(1)(A). Pub. L. 98–38, § 4(a), inserted “(other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker or municipal securities dealer)” after “securities dealer”.
Subsec. (b)(2)(B). Pub. L. 98–38, § 4(b), inserted “(other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker or municipal securities dealer)” after “broker, dealer, or municipal securities dealer”.
Effective Date Of Amendment
Amendment by sections 925(a)(2) and 929F(a) of Pub. L. 111–203 effective 1 day after
Amendment by section 975(a)–(e) of Pub. L. 111–203 effective
Amendment by Pub. L. 101–429 effective
Effective Date
Section effective