Bipartisan legislation clarifying who counts as a U.S. municipal adviser was revived on Friday in the House of Representatives, increasing pressure on the U.S. Securities and Exchange Commission to release its definition of advisers soon.
The Dodd-Frank law on Wall Street reform required new oversight of those who advise the cities, states and authorities selling municipal debt.
The SEC's proposed definition of who exactly counted as an adviser was universally panned in the $3.7 trillion municipal bond market as being too broad. The commission pulled the proposal but, more than two years later, has still not released a new version.
The legislation more narrowly defines municipal advisors. "The original language that defines municipal advisors includes people who are already regulated somewhere else, like volunteers on boards, bank tellers, attorneys, accountants, and other professionals," said Rep. Steve Stivers, a Republican from Ohio. "Washington needs to fix the mistake that Washington made, because it affects the rest of the country."
Stivers introduced the bill with Rep. Gwen Moore, a Democrat from Wisconsin who co-sponsored similar legislation last year. The House unanimously passed last year's bill, but the Senate never took up corresponding legislation. That bill's co-sponsor, Robert Dold, lost his seat in November's election.
Congress is not alone in turning up the pressure on the SEC, with the Securities Industry and Financial Markets Association pushing regulators and lawmakers to fashion a definition this year to provide certainty to advisers. Advisers were supposed to begin registering with the SEC, as brokers and dealers have done for years, starting in 2010 under Dodd-Frank.
On Thursday, SEC Chairman Elisse Walter told a congressional hearing that the definition remains a top priority for the commission's office of municipal securities and the final version will be narrower than the original proposal.