A measure that would reign in the requirement for advisors to municipalities to register with the SEC will come up for a vote in the House on Wednesday, September 19. The bill to enact such regulation is on what is described as a suspension calendar, which essentially puts the bill on a fast track.
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It’s widely anticipated that the bill will pass with more than two-third approval. The nature of this bill is remarkable because it is designed to shape one of the mandates issued by Dodd-Frank. The intent of Dodd-Frank was to put municipal advisors under the oversight of the SEC for the first time.
In the process of writing the rule that would do just that, the process of establishing a self-regulatory agency for such advisors came to light. Legislators have been concerned that moving oversight of municipal advisors to the SEC was too stringent a step.
Some have felt the Dodd-Frank rule would reach too far and include professionals that were beyond the scope of the intent.
So a bipartisan effort has created a more refined bill that has more realistic chances of passage. The original bill would have subjected municipal advisors to the same fiduciary standard as advisors to individual investors.
Rather than eliminate that part of the original bill, the fiduciary standard was reinserted in the new bill.
Lawmakers are pointing to the fact that the successful refinement of the bill shows that a bipartisan effort can be effective in fine tuning the Dodd-Frank Act.
It’s also viewed that the successful creation of this bill could be a step forward in the effort to develop a universal fiduciary duty
rule at the federal level.