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ASA Urges SEC to Halt Muni Advisor Regulatory Rollback

This kind of deregulation would favor undercapitalized municipal advisors over America’s highly regulated broker-dealers, while leaving investors vulnerable to fraud.



WASHINGTON – The American Securities Association (ASA) today sent a follow-up letter to the Securities and Exchange Commission (SEC) urging the Commission to pull its proposal to exempt municipal advisors from having to register as broker-dealers when participating in the direct placement of municipal securities with investors.


“This kind of deregulation would favor undercapitalized municipal advisors over America’s highly regulated broker-dealers, while leaving investors vulnerable to fraud,” said ASA CEO Chris Iacovella.

“Attaching the SEC’s antifraud authority means little if the entities it applies to are not required to be adequately capitalized or, in the case of certain municipal advisors, not capitalized at all,” Iacovella wrote in the letter.


“There will be little recourse for investors defrauded by a municipal advisor if there is no capital to protect investors from the advisor’s fraudulent activities in the municipal market. Unlike highly regulated broker-dealers, exempted municipal advisors would not be subject to the robust net capital and other regulatory requirements that are the hallmarks of the broker-dealer regulatory regime.”


“The Commission’s own arguments regarding antifraud authority support the swift rejection of this Proposal,” Iacovella concluded.


In December, ASA sent a similar letter to the Commission expressing strong opposition to every facet of the proposal, from process to substance.



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ASA’s regional financial services companies work in communities across the country to create jobs, grow the economy, and increase prosperity for all Americans. The ASA exclusively represents the capital market and private client interests of its members and seeks to promote free market principles making it easier to access financial advice and capital. ASA members help Americans save for retirement, provide Main Street businesses with capital to grow, and advise hardworking Americans how to create and preserve wealth. For the latest updates follow @AmerSecurities and learn more at http://americansecurities.org/.

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