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Regulatory Action Disclosures
    As proposed and adopted, the questions in Item 6 of Form MA-I
relating to regulatory actions by the Commission or the CFTC, similar
to those in Form U4, require the same disclosures as in proposed Item 9
of Form MA and additional disclosures, including whether the Commission
or the CFTC has ever found the individual to have:
     willfully violated, or been unable to comply with, any
provision of the federal securities laws, the Commodity Exchange Act,
and the rules thereunder, and any rule of the MSRB;
     willfully aided, abetted, commanded, induced, or procured
the violation by any other person of these laws and rules; and
     failed reasonably to supervise another person subject to
his or her supervision with a view to preventing violation of these
laws and rules.
    As proposed and adopted, Form MA-I requires the same disclosures as
proposed Form MA with respect to findings and actions relating to the
individual by other federal regulatory agencies, state regulatory
agencies, and foreign financial regulatory authorities. It also
requires additional disclosures, including whether the individual has
ever been subject to a final order of a state securities commission or
similar agency or office; state authority that supervises or examines
banks, savings associations, or credit unions; state insurance
commission; an appropriate federal banking agency; or the National
Credit Union Administration that:
     bars the individual from association with an entity
regulated by such commission, agency, authority or office, or from
engaging in the business of securities, insurance, banking, savings
association activities, or credit union activities; or
     constitutes a final order based on violations of laws or
regulations that prohibit fraudulent, manipulative, or deceptive
conduct.
    In addition to the disclosures required of a municipal advisory
firm regarding its individual associated persons on proposed Form MA,
Form MA-I as proposed and adopted requires disclosure of any finding by
an SRO that the individual:
     willfully violated, or is unable to comply with, any
provision of the federal securities laws, the Commodity Exchange Act
and the rules thereunder, or the rules of the MSRB;
     willfully aided, abetted, counseled, commanded, induced,
or procured the violation of any of these laws or rules; or
     failed reasonably to supervise another person subject to
his or her supervision, with a view to preventing such violations.

Like Form MA, Form MA-I as proposed and adopted also requires
disclosure of whether the individual had an authorization to act as an
attorney, accountant or federal contractor revoked or suspended.

    Item 6 of Form MA-I as proposed and adopted also requires
disclosure of whether the individual has been notified in writing that
he or she is currently the subject of a regulatory complaint or
proceeding that could result in any occurrence of the kind that would
trigger any of the disclosure requirements described above relating to
regulatory actions, except the latter occurrence pertaining to
attorneys, accountants, and federal contractors. The form advises that
if the answer is affirmative, the filer must complete a Regulatory
Action DRP.\1221\
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    \1221\ Form MA does not include an analogous question and
advisory in its regulatory action section. Item 6, as proposed, also
asked whether the individual has been notified in writing that he or
she is the subject of an investigation that could result in
affirmative answers to questions about criminal and regulatory
actions above in the form. This question has been separated into a
separate section in the form, as adopted, titled ``Investigation
Disclosures.'' See infra note 1223 and accompanying text.

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    The DRP for regulatory action disclosure in Form MA-I, as proposed
and adopted, requires the filer to provide further details, including:
the allegations, which regulatory authority initiated the action, the
kind of product involved, and the sanctions sought; the status of the
action; the disposition or resolution of the action, the sanctions
ordered, and their duration; the registration capacities of the
individual that were affected; whether requalification was a condition
of any sanction reported, and whether it was by exam, retraining, or
other process; the length of time given to requalify; and whether the
requalification condition was satisfied. Disclosures required in the
Regulatory Action DRP, as proposed, also include details of any
monetary sanction imposed, including amount; portion levied against the
individual; any amount waived; payment plan; whether such plan was
current; date paid; and whether the sanction was a civil or
administrative penalty or fine, a monetary penalty other than a fine,
disgorgement, or restitution. Revisions made in the Regulatory Action
DRP, as adopted, include the following:
     In the DRP, as proposed, a filer was asked to identify
every type of product involved in the action. As adopted, the DRP
requires the filer to distinguish between principal product types and
other products.
     As proposed, the DRP asked about any bars and suspensions
of the individual from his or her registration capacities. As adopted,
the DRP also requires information specific to any injunction that was
imposed as a regulatory sanction.
     In addition to the questions about requalification and
exams, as described above, the DRP as adopted asks for a description in
narrative form of any examination, re-training, or other process that
was required as a condition for the person to re-qualify.
    The Commission believes that these additional details will provide
regulators, municipal entities, and investors with a more accurate
picture of disciplinary history of the individual.\1222\
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    \1222\ Other revisions in the adopted version of the Regulatory
Action DRP: The form now asks for date of service of process in
pending actions; and additional details when one or more injunctions
specify different time periods; and more choices to describe
sanctions sought, how the action was resolved, and sanctions
ordered.
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Disclosure of Investigations \1223\
---------------------------------------------------------------------------

    \1223\ See supra note 1203.
---------------------------------------------------------------------------

    Item 6 of Form MA-I, as proposed and adopted, asks whether the
individual has been notified in writing that he or she is currently the
subject of any investigation that could result in a positive answer to
any of the questions in either the criminal and regulatory sections of
Item 6 described, except the question pertaining to attorneys,
accountants, and federal contractors. If the answer is positive, an
Investigation DRP must be filed.
    The Investigation DRP requires details of any such investigation,
including the date the investigation was initiated and whether it was
initiated by an SRO, a foreign financial regulatory authority (giving
the specific jurisdiction), the Commission, other federal agency, or
``other.'' The Investigation DRP requires that the full name of the
authority that initiated the investigation be specified. Space is
provided for the filer to briefly describe the nature of the
investigation, if known; whether it was pending or resolved; and
details of any resolution. Space for optional comment is also provided
to present a brief summary of the circumstances leading to the
investigation and its current status or final disposition and/or
findings.
    The Investigation DRP also asks for similar details regarding a
criminal investigation by a federal, military, state, foreign or
international authority or court. Although Item 6 requires a DRP for
criminal investigations, the DRP, as proposed, did not specifically
reference criminal investigations or authorities.
Civil Judicial Action Disclosure
    The disclosures required by Form MA-I with respect to certain
matters relating to an individual's civil judicial history are the same
as disclosures required on Form MA. Thus, a filer is required to
disclose on Form MA-I whether the individual:
     was ever enjoined by a domestic or foreign court in
connection with any investment-related or municipal advisor-related
activity;
     was ever found by a domestic or foreign court to be
involved in a violation of any investment-related or municipal advisor-
related statute or regulation; or
     ever had an investment-related or municipal advisor-
related civil action brought against him or her dismissed, pursuant to
a settlement agreement, by a domestic jurisdiction \1224\ or foreign
financial regulatory authority; or
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    \1224\ The phrase ``domestic jurisdiction'' is used in the form,
as adopted, in place of ``state'' in the proposed version. The
question of whether such an occurrence is part of the individual's
history was not intended to be limited to state actions.
---------------------------------------------------------------------------

     was ever named in any such pending action that could
result in a positive answer to the three previous questions.
    As discussed in the Proposal, the Commission believes that it is
appropriate to seek information regarding investment-related activities
as well as municipal advisor-related activities due to the significant
similarities that exist between the two advisory functions. Moreover,
such information could serve as a basis to institute proceedings to
deny registration of a municipal advisor or to impose other sanctions
on the municipal advisor's activities.\1225\
---------------------------------------------------------------------------

    \1225\ See Proposal, 76 FR 854-855.
---------------------------------------------------------------------------

    A DRP is required for affirmative responses to questions under this
item. Specifically, the DRP requires, among other things, information
regarding: by whom the court action was initiated; the name of the
party initiating the proceeding; information about the relief sought;
the date on which the action was filed and notice or process was
served; the types of financial products involved; a description of the
allegations relating to the civil action; the current status, including
whether the action is on appeal and details relating to any such
appeal; sanction details; and if the disposition resulted in a fine,
disgorgement, restitution or monetary compensation, information
relating thereto. The DRP also provides the opportunity for a filer to
provide additional comment, including a summary of the circumstances
leading to the action and current status.
    The Civil Judicial Action DRP, as adopted, has been modified to ask
whether the individual is a named defendant in the action for which the
DRP is being completed; \1226\ indicate, if an order was issued,
whether the order is a final order based on violations of any laws or
regulations that prohibit fraudulent or deceptive conduct; and indicate
whether a condition of any sanction was requalification by examination,
retraining, or other process. The Commission believes that these
changes generally will add clarity

for filers in determining the type of information that must be
provided.\1227\
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    \1226\ In addition, this DRP, as proposed and adopted, asked for
the full name(s) of the plaintiff(s) in the action. The adopted
version further asks the filer whether all plaintiffs were fully
identified, to make clear that the information needs to be complete.
    \1227\ In addition, the list of sanctions or relief that are
specified as required to be reported has more detail in order to
provide more choices for filers. The list of specific possible
resolutions of the action that the applicant can indicate as
applicable has also been expanded. More information also is sought
regarding details of how the action was resolved, and, if resolved
with sanctions, more details about those sanctions.
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Customer Complaints/Arbitration/Civil Litigation
    Form MA does not require a municipal advisory firm to disclose any
customer complaints, arbitration matters, and civil litigation
concerning natural person municipal advisors. Form MA-I, however,
requires disclosure of whether an individual engaged in municipal
advisory activities has ever been:
     the subject of a complaint initiated by a customer,
whether written or oral, regarding investment-related or municipal
advisor-related matters, which alleged that he or she was involved in
fraud, false statements, omissions, theft, embezzlement, wrongful
taking of property, bribery, forgery, counterfeiting, extortion, and
dishonest, unfair or unethical practices; or
     the subject of an arbitration or civil litigation
initiated by a customer regarding investment-related or municipal
advisor-related matters, which alleged that he or she was involved in
fraud, false statements, omissions, theft, embezzlement, wrongful
taking of property, bribery, forgery, counterfeiting, extortion, and
dishonest, unfair or unethical practices.
    In the case of a complaint, the filer must indicate whether the
complaint is still pending or was settled. In the case of arbitration
or civil litigation, the filer must indicate whether the arbitration or
litigation is still pending; resulted in an arbitration award or civil
judgment against the individual in any amount; or was settled.
    A DRP is required for affirmative responses to questions under this
item. Specifically, the relevant DRP requires the filer to disclose the
customer's name; the customer's state of residence and other states of
residence; the employing firm of the individual when the activities
occurred that led to the complaint, arbitration, CFTC reparation or
civil litigation; and the allegations and a brief summary of events
related to the allegations, including the dates when they occurred; the
product type; and the alleged compensatory damage amount.
    For customer complaints, arbitration, CFTC reparation, or civil
litigation in which the individual is not a named party, the DRP
requires disclosure of whether the complaint is oral or written, or
whether it is an arbitration, CFTC reparation or civil litigation (and
the arbitration or reparation forum, docket or case number, and the
filing date); whether the complaint, arbitration, CFTC reparation or
civil litigation is pending, and if not, the status. The DRP requires
disclosure of the status date and the settlement award amount,
including the individual's contribution amount.
    If the matter involves an arbitration or CFTC reparation and the
individual is a named respondent, the DRP requires disclosure of the
entity with which the claim was filed; the docket or case number; the
date process was served; whether the arbitration of CFTC reparation is
pending, and if not pending the form of disposition; the disposition
date; and the amount of the monetary award, settlement or reparation
(including the individual's contribution).
    If the matter involves a civil litigation in which the individual
is a defendant, the DRP requires disclosure of the court in which the
case was filed; the location of the court; the docket or case number;
the date the complaint was served on or received by the individual;
whether the litigation is still pending; if not still pending the form
of its disposition; the disposition date; the judgment, restitution or
settlement amount, including the individual's contribution amount;
whether the action is currently on appeal, and if so, the date the
appeal was filed, the court in which the appeal was filed, the location
of the court, and the docket or case number for the appeal. The DRP
also provides for optional additional comment, such as a summary of the
circumstances leading to the complaint.
    As discussed in the Proposal, these disclosures, too, mirror
similar disclosures in Form U4, provide additional information about
natural persons engaged in municipal advisory activities that may be
useful to municipal entities or obligated persons as clients or
prospective clients, and help the Commission prepare for and plan
examinations.\1228\
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    \1228\ See Proposal, 76 FR 855.
---------------------------------------------------------------------------

    Several revisions have been made to this DRP, as adopted. In the
questions relating to settlements, awards, and monetary judgments, the
DRP now additionally asks whether any portion of the individual's
settlement, award, or monetary judgment amount was waived, and, if so,
how much; and whether the final amount was paid in full, and, if so,
the date. In the section relating to civil litigation, the DRP now
additionally asks whether the individual appealed, and, if so, to which
court, its location, and other details.\1229\
---------------------------------------------------------------------------

    \1229\ See generally supra notes 1208-1215.
---------------------------------------------------------------------------

Termination Disclosure
    Unlike Form MA, Form MA-I requires disclosure regarding the
termination of a natural person's employment. Specifically, consistent
with Form U4, Form MA-I asks whether the individual ever voluntarily
resigned or was discharged or permitted to resign after allegations
were made that accused him or her of:
     violating investment-related or municipal advisor-related
statutes, regulations, rules, or industry standards of conduct;
     fraud or the wrongful taking of property; or
     failure to supervise in connection with investment-related
or municipal advisor-related statutes, regulations, rules or industry
standards of conduct.
    An affirmative response to the questions described above requires
additional information on a related DRP. Specifically, the DRP requires
disclosure of the name of the firm, the type of termination (whether
discharged, permitted to resign, or voluntary resignation), the
termination date, the allegations, and the product types. The DRP also
provides for optional additional comment, such as a summary of the
circumstances leading to the termination.
    As discussed in the Proposal, this disclosure will provide
information that will be useful to the Commission in planning and
preparing for inspections and examinations. The disclosure also will be
useful to the public generally (including municipal entities and
obligated persons, as clients or prospective clients).\1230\
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    \1230\ See Proposal, 76 FR 856.
---------------------------------------------------------------------------

Financial Disclosures
    Item 6 of Form MA-I, as proposed and as adopted, also requires
financial disclosures regarding individuals that are not required to be
made on Form MA by municipal advisory firms, generally, regarding their
associated persons or by sole proprietors regarding themselves.
Specifically, the form asks the filer whether, within the past ten
years:
     the individual has made a compromise with creditors, filed
a bankruptcy petition, or been the subject of an involuntary bankruptcy
petition;
     an organization controlled by the individual has made a
compromise with

creditors, filed a bankruptcy petition, or been the subject of an
involuntary bankruptcy petition based upon events that occurred while
he or she exercised control over it; or
     a broker or dealer controlled by the individual has been
the subject of an involuntary bankruptcy petition, had a trustee
appointed, or had a direct payment procedure initiated under the
Securities Investor Protection Act based upon events that occurred
while he or she exercised control over it.
    In addition, a filer must disclose whether a bonding company ever
denied, paid out on, or revoked a bond for the individual. There is no
DRP associated with these financial disclosures.
Judgment/Lien Disclosure
    Item 6 of Form MA-I also asks whether the individual has any
unsatisfied judgments or liens against him or her. An affirmative
response requires additional disclosure on a DRP. Specifically, the
filer must disclose the amount, holder, and type of the judgment or
lien. The form also requires information about the date the judgment or
lien was filed, the court in which the action was brought, the name and
location of the court, the docket or case number,\1231\ whether the
judgment or lien is outstanding, and if the judgment or lien is not
outstanding, the status date and how the matter was resolved. The DRP
also provides for optional comment, such as a brief summary of the
circumstances leading to the action.\1232\
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    \1231\ See supra note 968.
    \1232\ Modifications made to the DRPs of Form MA-I as adopted
are discussed below under the sub-heading, ``Other Changes in Form
MA-I, As Adopted.''
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    As discussed in the Proposal, the Commission believes that the
information that is required, which is consistent with that required by
Form U4, will be useful for its regulatory purposes, including planning
and preparing for inspections and examinations. The Commission also
believes that the information will be useful to the public generally
(including municipal entities and obligated persons, as clients or
prospective clients).\1233\
---------------------------------------------------------------------------

    \1233\ See Proposal, 76 FR 856.
---------------------------------------------------------------------------

Other Changes in Form MA-I, as Adopted
Additional Modifications to the DRPs
    The Commission has made the following modifications to the DRPs in
addition to those discussed above. An instruction has been added at the
beginning of all the DRPs, regarding incorporation by reference, to
clarify that the filer of Form MA-I may incorporate information either
from a DRP that was filed by the firm, or from a DRP filed by another
Commission registrant about the individual. This should help filers
avoid the inconvenience and burden of completing the additional
information.
    When a DRP is being filed to remove a previously filed DRP, the
filer in each case is asked whether the reason is because the matter
was resolved in the individual's favor, or because the DRP was filed in
error.\1234\ Moreover, as proposed, several of the DRPs asked for the
name of the employing firm of the individual when the relevant event
occurred only if the firm was a municipal advisory firm.\1235\ The
Commission has concluded, however, that the name of the individual's
employer when the activity occurred can be useful to regulators,
municipal entities, and investors regardless of whether the individual
was employed specifically by a municipal advisory firm, and is not
limiting the requested information to such firms. In the case of a
municipal advisory firm employer, however, the DRPs as adopted ask for
the municipal advisor registration number of the firm.\1236\
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    \1234\ This question is adapted from a similar question in the
DRPs to Form MA, and should help clarify the status of the applicant
for users of the information.
    \1235\ Included are the Regulatory, Civil Judicial Action,
Termination, and Customer Complaint/Arbitration/Civil Litigation
DRPs.
    \1236\ The Commission believes this specific information is
particularly relevant for municipal advisor regulation.
---------------------------------------------------------------------------

    As proposed, the Regulatory and Civil Action DRPs asked the filer
to identify the principal product types that were the subject of the
activity regarding which the formal action involving the individual was
taken. As adopted, they also ask for any other product types. Finally,
the adopted versions of the Regulatory and Civil Action DRPs ask for
the date on which notice or other process was served if the action
being reported on the DRP is still pending.
An Associated Person Who Ceases To Be Engaged in Municipal Advisory
Activities
    Because Form MA-I, as adopted, is not a registration form, when a
natural person associated with a registered municipal advisor ceases to
engage in municipal advisory activities on its behalf, Form MA-W--which
is a form designed for withdrawal of registration--will not be
required. Instead, the change must be reported by the registered
municipal advisor that filed the Form MA-I relating to that person.
This is accomplished by filing an amendment to the Form MA-I, which
must be submitted promptly, like any other amendment.
    For this purpose, a filer submitting an amendment to Form MA-I can
indicate that the purpose of the amendment is to report that the
individual to whom the form relates is no longer an associated person
of the municipal advisory firm or no longer engages in municipal
advisory activities on its behalf. When submitting an amendment of this
kind, the filer must complete only the portion of the form asking for
the name of the individual, his or her social security number, and CRD
Number if any (Item 1-A) and the Execution Page of the form (Item 7).
Non-Substantive, Technical, and Clarifying Changes
    In addition, a number of non-substantive, technical and clarifying
changes have been made to Form MA-I, as adopted, to make the form
clearer and more user-friendly. These include, where applicable, the
same kinds of changes made to Form MA.\1237\
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    \1237\ See supra note 1147. Examples of other revisions of this
nature in Form MA-I include: Guidance advising filers to refer to
the Specific Instructions for Form MA-I; corrections of inaccurate
references; clarifying and editorial changes; and additional
instructions to aid the filer that do not introduce any substantive
changes.
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Item 7: Execution of the Form
    If Form MA-I is being filed by a municipal advisory firm with
respect to a natural person engaged in municipal advisory activities on
its behalf, the authorized representative of the firm who signs the
Execution Page of Form MA-I must attest to the truth and correctness of
the information provided in the form. He or she must also attest that
the firm has obtained and retained written consent from the individual
that service of any civil action brought by, or notice of any
proceeding before, the SEC or any self-regulatory organization in
connection with the individual's municipal advisory activities may be
given by registered or certified mail to the individual's address given
in Item 1 of the firm.
    If Form MA-I is being filed by a natural person municipal advisor
who is a sole proprietor, by signing the Execution Page of Form MA-I,
the filer must represent that the information and statements made in
the form are true and correct. He or she must also consent that service
of process of any civil action or notice of any proceeding before the
Commission or an SRO

regarding its municipal advisory activities may be given by registered
or certified mail to the address he or she has supplied in Item 1 of
the form.
    As proposed, Form MA-I also required its signatory to certify that
he or she has: (a) Sufficient qualifications, training, experience, and
competence to effectively carry out his or her designated functions;
(b) met, or within any applicable required timeframes will meet, such
standards of training, experience, and competence, and such other
qualifications, including testing, for a municipal advisor, required by
the Commission, the MSRB or any other relevant SRO; and (c) the
necessary understanding of, and ability to comply with, all applicable
regulatory obligations.
    The Commission received comment letters on the self-certification
requirement in Form MA-I from many municipal entities and agencies
concerned about the impact of requiring appointed members of public
boards to make such certifications. As discussed in Section
III.A.1.c.i., the Commission is exempting all members of the governing
body of a municipal entity (acting in their capacity as such),
including appointed members, from the requirement to register as
municipal advisors. Thus, the Commission believes that the concerns of
these commenters have been addressed. However, one comment received by
the Commission regarding the self-certification requirement in Form MA-
I, as proposed, called the requirement ``problematic.'' \1238\
---------------------------------------------------------------------------

    \1238\ See SIFMA Letter I.
---------------------------------------------------------------------------

    In view of the change in the nature of Form MA-I, as adopted,
including who is required to sign the form, the Commission has decided
to eliminate the self-certification requirement in Item 7. Because,
under the rules, as adopted, individuals who engage in municipal
advisory activities on behalf of a registered firm are exempt from
registration, and, with respect to these individuals, the function of
Form MA-I is only to provide information, the self-certification
requirement is no longer a propos. Moreover, as discussed above, the
Commission has determined to remove the self-certification requirement
with respect to firms in Form MA. Thus, Form MA-I, as adopted, will no
longer require self-certification.
3. Rule 15Ba1-3: Exemption of Certain Natural Persons Associated With
Registered Municipal Advisors From Registration\1239\
---------------------------------------------------------------------------

    \1239\ Rule 15Ba1-3, under the Proposal, contained the
requirements for a municipal advisor to withdraw an existing
registration. This provision is being adopted as Rule 15Ba1-4, which
is discussed below.
---------------------------------------------------------------------------

    Rule 15Ba1-3, as adopted, exempts certain natural persons from
registration with the Commission as a municipal advisor if the natural
person is associated with a registered municipal advisor and engages in
municipal advisory activities solely on behalf of a registered
municipal advisor. This exemption is discussed above in Section
III.A.2.a.\1240\
---------------------------------------------------------------------------

    \1240\ See supra notes 938-939 and accompanying text.
---------------------------------------------------------------------------

4. Rule 15Ba1-4: Withdrawal From Municipal Advisor Registration; Form
MA-W
a. Rule 15Ba1-4: Withdrawal From Municipal Advisor Registration
    Proposed Rule 15Ba1-3 provided that notice of withdrawal from
registration as a municipal advisor must be filed on Form MA-W, in
accordance with the instructions to the form, and set forth other
requirements regarding withdrawal of a municipal advisor from
registration. The Commission received one comment letter regarding this
proposed rule which supported the proposed rule.\1241\ The Commission
is adopting Rule 15Ba1-4 as it was set forth in proposed Rule 15Ba1-3,
with certain minor, technical modifications.\1242\ The rule as adopted,
however, only applies to municipal advisors registered on Form MA,
because the Commission is exempting from registration certain natural
persons who are associated persons of a registered municipal advisor
and who engage in municipal advisory activities solely on behalf of a
registered municipal advisor.\1243\
---------------------------------------------------------------------------

    \1241\ See MSRB Letter I.
    \1242\ See Rule 15Ba1-4, as adopted. The modifications are non-
substantive and are limited to updating citations in the rule text
or changing the article ``such'' to the article ``the.''
    \1243\ In the Proposal, the Commission proposed to require
natural person municipal advisors to register on proposed Form MA-I
and accordingly proposed that these natural person municipal
advisors would be required to file a Form MA-W to withdraw from
registration with the Commission as a municipal advisor. See
Proposal, 76 FR 850, 857. As discussed in more detail in Section
III.A.2.a. and Section III.A.3., the Commission is adopting an
exemption from registration for certain natural persons and Form MA-
I will not be an application for registration.
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    As with Forms MA and MA-I, Form MA-W must be filed electronically
with the Commission.\1244\ Form MA-W also constitutes a ``report'' for
purposes of Sections 15B(c), 17(a), 18(a), 32(a) (15 U.S.C. 78o-4(c),
78q(a), 78r(a), 78ff(a)) and other applicable provisions of the
Exchange Act.\1245\
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    \1244\ See Rule 15Ba1-4(b).
    \1245\ See Rule 15Ba1-4(d). As a consequence, it will also be
unlawful for a municipal advisor to willfully make or cause to be
made, a false or misleading statement of a material fact or omit to
state a material fact in Form MA-W.
---------------------------------------------------------------------------

    Rule 15Ba1-4 also provides that a notice of withdrawal from
registration becomes effective for all matters on the 60\th\ day after
the filing of the Form MA-W. It may also become effective within a
longer time period to which the municipal advisor consents or which the
Commission by order determines as necessary or appropriate in the
public interest or for the protection of investors, or within a shorter
time if the Commission so determines.\1246\
---------------------------------------------------------------------------

    \1246\ See Rule 15Ba1-4(c).
---------------------------------------------------------------------------

    The rule further provides that if a municipal advisor filed a
notice of withdrawal from registration with the Commission at any time
subsequent to the date of issuance of a Commission order instituting
proceedings pursuant to Section 15B(c) of the Exchange Act \1247\ to
censure, place limitations on the activities, functions or operations
of, or suspend or revoke the registration of the municipal advisor or
if, prior to the effective date of the notice of withdrawal, the
Commission institutes such a proceeding or a proceeding to impose terms
and conditions upon the withdrawal, the notice of withdrawal will not
become effective except at the time and upon the terms and conditions
as deemed by the Commission as necessary or appropriate in the public
interest or for the protection of investors.\1248\
---------------------------------------------------------------------------

    \1247\ 15 U.S.C. 78o-4(c).
    \1248\ See Rule 15Ba1-4(c).
---------------------------------------------------------------------------

b. Form MA-W
    The Commission received one comment letter regarding Form MA-W,
which was generally supportive of the form.\1249\ As discussed in more
detail above,\1250\ the Commission is exempting certain natural persons
from municipal advisor registration. Accordingly, the Commission is
adopting Form MA-W substantially as proposed, but is modifying it
solely to remove all references to individual registration of natural
persons associated with a municipal advisor and engaged in municipal
advisory activities on its behalf and to Form MA-I as an

application for registration \1251\ and to add an introductory
direction to refer to the General Instructions for the forms in the MA
series before completing Form MA-W. Form MA-W for municipal advisors is
designed to be generally consistent with the requirements of Form ADV-W
for investment advisers withdrawing from registration. First, Form MA-W
requires a municipal advisor to provide identifying information keyed
to the identifying information on, and the SEC file number of, the
municipal advisor's Form MA. A municipal advisor is required to provide
on Form MA-W the name of a principal or employee of the municipal
advisor who is authorized to receive information and respond to
questions about the Form MA-W. Contact information for a municipal
advisor's outside counsel is insufficient.
---------------------------------------------------------------------------

    \1249\ See MSRB Letter I.
    \1250\ See supra note 1243 and supra Section III.A.2.a. and
Section III.A.3.
    \1251\ The Commission has removed references in certain
instructions that contemplated individual registration of certain
natural persons on Form MA-I and that designated Form MA-I as a
registration form. Additionally, on the Execution Page, the
Commission has also removed the certification for natural person
municipal advisors other than sole proprietors.
    When a natural person for whom a municipal advisory firm filed a
Form MA-I is no longer an associated person or no longer engages in
municipal advisory activities on behalf of the firm, the firm must
file an amendment to the Form MA-I to indicate this change. See
General Instruction 2.d. of the General Instructions and supra
Section III.A.2.c., under sub-heading ``An Associated Person Who
Ceases to be Engaged in Municipal Advisory Activities.''
---------------------------------------------------------------------------

    A municipal advisor filing to withdraw its registration is required
to indicate on Form MA-W whether it has received any pre-paid fees for
municipal advisory activities that have not been delivered, including
subscription fees for publications, and, if so, to specify the amount.
In addition, the withdrawing municipal advisor is required to indicate
how much money, if any, it has borrowed from clients and has not
repaid. If the municipal advisor responds affirmatively to either
question, it is required to disclose on Schedule W2 to Form MA-W the
nature and amount of its assets and liabilities and its net worth as of
the last day of the month prior to the filing of the Form MA-W.
    A municipal advisor that is filing to withdraw its registration is
required to indicate on Form MA-W whether it has assigned any municipal
advisory contracts to another person that engages in municipal advisory
activities, and if so, the municipal advisor is required to list in
Section 4 of Schedule W1 to Form MA-W each person to whom it has
assigned any such municipal advisory contracts and provide the
requested information.
    A municipal advisor filing to withdraw its registration also is
required to indicate whether there are any unsatisfied judgments or
liens against it. If the municipal advisor responds affirmatively that
it owes money or has any judgments or liens against it, it is required
to disclose on Schedule W2 to Form MA-W the nature and amount of its
assets and liabilities and its net worth as of the last day of the
month prior to the filing of the Form MA-W.
    As discussed in the Proposal, the Commission believes that
requiring such information from a withdrawing municipal advisor is
appropriate for the protection of investors and those persons who do
business with municipal advisors.\1252\ The filing of Form MA-W and the
information contained in the form will provide notice that the
municipal advisor is no longer registered and, therefore, is not able
to engage in municipal advisory activities without violating federal
securities laws.\1253\ Additionally, the information provided will
alert clients and prospective clients to a municipal advisor's
financial stability if the municipal advisor received fees from clients
for services not yet delivered, borrowed any money from clients that
has not been repaid, or has any unsatisfied judgments or liens at the
time of withdrawal because the municipal advisor would be required to
disclose the nature and amount of its assets and liabilities and net
worth on Schedule W2. This information also will help regulators'
investigative and enforcement efforts. Additionally, as noted in the
Proposal, an investment adviser that withdraws from registration must
supply similar information on its Form ADV-W.\1254\
---------------------------------------------------------------------------

    \1252\ See Proposal, 76 FR 857.
    \1253\ See id.
    \1254\ See 17 CFR 279.2. See also Proposal, 76 FR 857.
---------------------------------------------------------------------------

    As discussed below, Rule 15Ba1-8(c), as adopted, requires a
municipal advisor withdrawing from registration to preserve its books
and records.\1255\ Therefore, a municipal advisor filing a Form MA-W is
required to list the name and address of each person who has or will
have custody or possession of the municipal advisor's books and records
and the location at which such books and records are or will be kept.
In addition, as discussed above, a withdrawing municipal advisor also
is required to identify on Schedule W1 each person to whom it has
assigned any of its contracts. As discussed in the Proposal, the
Commission believes that such a requirement--which also exists for
investment advisers--is important for the protection of participants in
the municipal securities markets.\1256\
---------------------------------------------------------------------------

    \1255\ See infra Section III.C.
    \1256\ See Proposal, 76 FR 857.
---------------------------------------------------------------------------

    The signatory to the Form MA-W is required to certify, under
penalty of perjury, that the information and statements made in the
Form MA-W, including any exhibits or other information submitted, are
true. If the form is being filed on behalf of a municipal advisor that
is not a sole proprietor,\1257\ the signature constitutes such
certification by both the municipal advisor and the signatory.
Similarly, the signatory is required to certify that the municipal
advisor's books and records will be preserved and available for
inspection as required by law. The signatory is also required to
authorize any person having custody or possession of these books and
records to make them available to authorized regulatory
representatives.
---------------------------------------------------------------------------

    \1257\ As discussed in the Proposal, in the case of a municipal
advisor that is not a sole proprietor, the signatory's certification
includes a statement that he or she has signed on behalf of and with
the authority of the municipal advisor firm withdrawing the
registration. See id., at 857, note 254.
---------------------------------------------------------------------------

    The certification includes a statement that all information
previously submitted on the municipal advisor's most recent Form MA
(and Form MA-I for sole proprietors) is accurate and complete as of the
date the Form MA-W was signed. It also includes an understanding by the
signatory that if any information contained in items on the Form MA-W
is different from the information contained on the most recent Form MA
(and MA-I for sole proprietors), the information on the Form MA-W will
replace the corresponding entry on the municipal advisor's Form MA
(and/or MA-I for sole proprietors). As discussed in the Proposal, the
Commission believes that the certification requirement should serve as
an effective means to assure that the information supplied in Form MA-W
is correct.\1258\
---------------------------------------------------------------------------

    \1258\ See id., at 858.
---------------------------------------------------------------------------

5. Rule 15Ba1-5: Amendments to Form MA and Form MA-I
    Proposed Rule 15Ba1-4 set forth requirements regarding when
amendments to Form MA and Form MA-I are required and how such
amendments must be filed. The Commission received one comment letter
regarding this proposed rule which supported the proposed rule.\1259\
The Commission is adopting Rule 15Ba1-5 substantially as proposed in
Rule 15Ba1-4, but is modifying the rule

primarily to be consistent with the exemption of certain natural
persons from municipal advisor registration that the Commission is
adopting in Rule 15Ba1-3. Specifically, the Commission's modifications
to Rule 15Ba1-5 are limited to removing or revising rule text to
reflect that natural persons who are associated with a municipal
advisor and engaged in municipal advisory activities on its behalf are
not required to register as municipal advisors on Form MA and that Form
MA-I is not an application for registration and to update citations in
the rule text. Therefore, the requirement in Rule 15Ba1-5 to amend
promptly Form MA and Form MA-I applies exclusively to registered
municipal advisors since they will be responsible for amendments to
their own Form MA and amendments to Form MA-I for each natural person
who is a person associated with the municipal advisor and engaged in
municipal advisory activities on its behalf.\1260\
---------------------------------------------------------------------------

    \1259\ See MSRB Letter I.
    \1260\ See Rule 15Ba1-5(a) and (b).
---------------------------------------------------------------------------

    Rule 15Ba1-5(a) requires that a registered municipal advisor must
promptly amend the information in its Form MA: (1) At least annually,
within 90 days of the end of the municipal advisor's fiscal year, or of
the end of the calendar year for a sole proprietor; \1261\ and (2) more
frequently than annually if required by the General Instructions.\1262\
---------------------------------------------------------------------------

    \1261\ See Rule 15Ba1-5(a)(1).
    \1262\ See Rule 15Ba1-5(a)(2). See also infra Section III.A.8.
(discussing the General Instructions and Glossary).
---------------------------------------------------------------------------

    In addition to the annual update amendment to Form MA, General
Instruction 8 specifies that a municipal advisory firm must amend its
Form MA promptly whenever a material event has occurred that changes
the information provided in the form. General Instruction 8 further
states that, for purposes of Form MA, a material event will be deemed
to have occurred if information provided in response to Item 1
(Identifying Information), Item 2 (Form of Organization), or Item 9
(Disclosure Information) becomes inaccurate in any way; or if
information provided in response to Item 3 (Successions), Item 7
(Participation or Interest of Applicant, or of Associated Persons of
Applicant in Municipal Advisory Client or Solicitee Transactions), or
Item 8 (Owners, Officers and Other Control Persons) becomes materially
inaccurate.\1263\
---------------------------------------------------------------------------

    \1263\ See General Instruction 8 in the Instructions for the
Form MA Series. General Instruction 8 further notes that a municipal
advisor submitting an amendment between annual updates is not
required to update the responses to Item 4 (Information About
Applicant's Business), Item 5 (Other Business Activities), Item 6
(Financial Industry and Other Related Affiliations of Associated
Persons), or Item 10 (Small Businesses), even if the responses to
those items have become inaccurate.
---------------------------------------------------------------------------

    In addition, General Instruction 8 provides that a non-resident
municipal advisory firm must promptly file an amendment to Form MA to
attach an updated opinion of counsel after any changes in the legal or
regulatory framework or the firm's physical facilities that would
impact its ability, as a matter of law, to provide the Commission with
access to its books and records or to inspect and examine the municipal
advisory firm.\1264\ As the Commission stated in the Proposal,\1265\ an
amendment in such case should include a revised opinion of counsel
describing how, as a matter of law, the municipal advisor will continue
to meet its obligations to provide the Commission with the required
access to the municipal advisor's books and records and to be subject
to the Commission's onsite \1266\ inspection and examination under the
new regulatory regime. If a registered non-resident municipal advisory
firm becomes unable to comply with this requirement, then this may be a
basis for the Commission to institute proceedings to revoke the
municipal advisor's registration.
---------------------------------------------------------------------------

    \1264\ See General Instruction 8 in the Instructions for the
Form MA Series. See also infra note 1308 and accompanying text. For
a discussion of Rule 15Ba1-6 (Consent to Service of Process to be
Filed by Non-Resident Municipal Advisors) and Form MA-NR
(Designation of U.S. Agent for Service of Process for Non-
Residents), see Section III.A.6.
    \1265\ See Proposal, 76 FR 858.
    \1266\ As adopted, General Instruction 8 does not require the
opinion of counsel to state that the municipal advisor is able, as a
matter of law, to be subject specifically to ``onsite'' inspection
and examination.
---------------------------------------------------------------------------

    Regarding amendments to Form MA-I, Rule 15Ba1-5(b) provides that a
registered municipal advisor must promptly amend the information
contained in Form MA-I by filing an amended Form MA-I whenever the
information contained in the Form MA-I becomes inaccurate for any
reason. As discussed above, registered municipal advisors will be
responsible for filing and amending Form MA-I for each natural person
associated with the municipal advisor and engaged in municipal advisory
activities on its behalf.\1267\ As discussed in the Proposal, unlike
municipal advisors filing Form MA, who must file annual updating
amendments, the Commission is not requiring municipal advisory firms to
update annually the Forms MA-I for each natural person who is
associated with the municipal advisor and engaged in municipal advisory
activities on its behalf.\1268\ The Commission believes that the
additional gains obtained by requiring the confirmation of an annual
update would impose unnecessary burdens on municipal advisors and that
the standard adopted in Rule 15Ba1-5(b) strikes an appropriate balance
between maintaining current information regarding natural persons and
minimizing the burden on municipal advisors to provide this
information.
---------------------------------------------------------------------------

    \1267\ See supra note 1260 and accompanying text.
    \1268\ See Proposal, 76 FR 858. As discussed in the Proposal, in
the case of firms, changes commonly occur over the course of a year,
and a wide range of changes is possible--e.g., changes in control
persons and personnel, number of employees, nature of services
provided, types of clients, and compensation arrangements, among
others, as well as new disclosures that may be necessary for all of
the firm's associated persons, rather than just one natural person.
Accordingly, the Commission believes it is appropriate to require a
firm to confirm through an annual update that its registration is
up-to-date. With respect to natural person municipal advisors,
however, an amendment to Form MA-I is promptly required whenever
information previously provided becomes inaccurate. The Commission
believes that any additional benefits of an annual update would not
justify the burden such a requirement would impose. See id.
---------------------------------------------------------------------------

    All amendments to Form MA and Form MA-I are required to be filed
electronically with the Commission.\1269\ In addition, amendments to
Form MA and Form MA-I constitute ``reports'' for purposes of Sections
15B(c), 17(a), 18(a), 32(a) (15 U.S.C. 78o-4(c), 78q(a), 78r(a),
78ff(a)) and other applicable provisions of the Exchange Act.\1270\ As
discussed in the Proposal, these rules are consistent with the
Commission's requirements for other registrants (e.g., national
securities exchanges, securities information processors (``SIPs''),
broker-dealers) to file updated and annual amendments with the
Commission.\1271\ The Commission believes that such amendments are
important for obtaining updated information for registered municipal
advisory firms and their associated natural persons engaged in
municipal advisory activities on the firms' behalf so that the
Commission can assess whether such persons continue to be in compliance
with the federal securities laws and the rules and regulations
thereunder.\1272\ Obtaining updated information will also assist the
Commission in its inspection and examination of municipal advisors and
better inform the MSRB's regulation of municipal advisors. In addition,
the Commission believes it is important for

municipal entities and obligated persons, as well as the public
generally, to have access to current information regarding advisors
registered with the Commission.
---------------------------------------------------------------------------

    \1269\ See Rule 15Ba1-5(c).
    \1270\ See Rule 15Ba1-5(d).
    \1271\ See, e.g., Rules 6a-2 and 15b3-1 under the Exchange Act.
17 CFR 240.6a-2 and 240.15b3-1. See also 17 CFR 249.1001 (Form SIP,
application for registration as a securities information processor
or to amend such an application or registration).
    \1272\ See Proposal, 76 FR 858.
---------------------------------------------------------------------------

6. Rule 15Ba1-6: Consent To Service of Process To Be Filed by Non-
Resident Registered Municipal Advisors; Legal Opinion To Be Provided by
Non-Resident Municipal Advisors; and Form MA-NR
a. Rule 15Ba1-6: Consent To Service of Process To Be Filed by Non-
Resident Registered Municipal Advisors; Legal Opinion To Be Provided by
Non-Resident Municipal Advisors
    Proposed Rule 15Ba1-5 required each non-resident \1273\ municipal
advisor and each non-resident general partner and managing agent \1274\
of a municipal advisor to furnish to the Commission, at the time of
filing Form MA or Form MA-I, a written irrevocable consent and power of
attorney on Form MA-NR to appoint an agent in the United States upon
whom may be served any process, pleadings, or other papers in any
action brought against the non-resident municipal advisor, general
partner or managing agent.\1275\ Proposed Rule 15Ba1-5 also specified
circumstances when each non-resident municipal advisor, general partner
and managing agent would be required to amend Form MA-NR. In addition,
proposed Rule 15Ba1-5 required that each non-resident municipal
advisor, other than a natural person, provide an opinion of counsel
that the municipal advisor can provide the Commission with access to
the advisor's books and records and submit to onsite inspection and
examination by the Commission. The Commission received one comment
letter regarding this proposed rule which supported the proposed
rule.\1276\
---------------------------------------------------------------------------

    \1273\ The definition of ``non-resident'' in Rule 15Ba1-1(j)
that the Commission is adopting is substantially similar to the
definition of ``non-resident'' that the Commission set forth in
proposed Rule 15Ba1-1(h). However, the Commission is modifying this
definition so that it includes only those persons residing, having
their principal office and place of business, or incorporated in any
place not subject to the jurisdiction of the United States.
Therefore, persons residing; having their principal office and place
of business; and incorporated in the United States or a territory of
the United States would not be considered non-residents. Rule 15Ba1-
1(j), as adopted, defines ``non-resident'' as ``(1) [i]n the case of
an individual, one who resides in or has his principal office and
place of business in any place not subject to the jurisdiction of
the United States; (2) [i]n the case of a corporation, one
incorporated in or having its principal office and place of business
in any place not subject to the jurisdiction of the United States;
or (3) [i]n the case of a partnership or other unincorporated
organization or association, one having its principal office and
place of business in any place not subject to the jurisdiction of
the United States.'' As adopted, this definition of ``non-resident''
is similar to the definition of ``non-resident broker-dealer'' in
Rule 15b1-5 under the Exchange Act. See 17 CFR 240.15b1-5. See also
17 CFR 275.0-2 (defining the term ``non-resident'' for purposes of
serving non-residents in connection with Form ADV).
    \1274\ Rule 15Ba1-1(c) defines a ``managing agent'' as ``any
person, including a trustee, who directs or manages, or who
participates in directing or managing, the affairs of any
unincorporated organization or association other than a
partnership.'' As discussed in the Proposal, this definition is
consistent with the definition of a ``managing agent'' as used in
Rule 15b1-5 under the Exchange Act relating to consent to service of
process to be furnished by non-resident brokers or dealers and by
non-resident general partners or managing agents of brokers or
dealers. See 17 CFR 240.15b1-5. See also 17 CFR 275.0-2 (discussing
general procedures for serving non-resident investment advisers in
connection with Form ADV); and Proposal, 76 FR 859, note 262 and
accompanying text.
    \1275\ See Rule 15Ba1-5(a). The agent may not be a Commission
member, official, or employee.
    \1276\ See MSRB Letter I.
---------------------------------------------------------------------------

    While adopted Rule 15Ba1-6 retains the same purpose and focus of
the proposed rule, the Commission is adopting Rule 15Ba1-6 with certain
modifications to reflect the Commission's decision to exempt certain
natural persons from municipal advisor registration in Rule 15Ba1-3, as
adopted, and to clarify and update the rule text as described below.
First, the Commission is removing certain references that contemplate
individual registration on Form MA-I of natural persons associated
persons with a municipal advisor and is revising the rule text to
clarify that a municipal advisor is required to file a Form MA-NR for
each of its non-resident general partners, managing agents, and
associated natural persons engaged in municipal advisor activities on
the municipal advisor's behalf. Second, since the term registered
municipal advisor no longer includes natural persons who are associated
with a municipal advisor and engaged in municipal advisory activity on
its behalf, the Commission is adding new language to Rule 15Ba1-6 to
address such persons. For example, Rule 15Ba1-6(a)(2) requires a
registered municipal advisor, at the time of the Form MA-I filing, to
file with the Commission a Form MA-NR for each non-resident natural
person associated with a municipal advisor and engaged in municipal
advisory activities on its behalf.\1277\ Third, the Commission is
modifying the rule to require registered municipal advisors to file a
new Form MA-NR in the instances where the proposed rule required an
amendment because, unlike Form MA and Form MA-I, Form MA-NR is not
completed online and signed electronically.\1278\ Form MA-NR must be
printed out and signed manually and a scanned copy of the signed and
notarized form must be attached as a PDF file to the Form MA or Form
MA-I being submitted.\1279\ Finally, the Commission made other
clarifying revisions to and updated the citations in the rule
text.\1280\
---------------------------------------------------------------------------

    \1277\ Similarly, Rule 15Ba1-6(c)(2), as adopted, sets forth
requirements regarding when a registered municipal advisor is
required to file a new Form MA-NR for its non-resident natural
persons who are associated with the municipal advisor and engaged in
municipal advisory activities on its behalf.
    \1278\ See General Instruction 2.c. in the Instructions for the
Form MA Series.
    \1279\ See id.
    \1280\ For example, the Commission removed ``onsite'' from Rule
15Ba1-6(d), as adopted, because the Commission does not conduct all
inspections and examinations onsite.
---------------------------------------------------------------------------

    As discussed in the Proposal,\1281\ the provisions in Rule 15Ba1-6,
as adopted, are designed to allow the Commission and others to provide
service of process to a registered non-resident municipal advisor, a
non-resident general partner or managing agent of a registered
municipal advisor, and non-resident natural person associated with a
municipal advisor and engaged in municipal advisory activities on its
behalf by requiring the municipal advisor to file a written irrevocable
consent and power of attorney on Form MA-NR to appoint an agent in the
United States for service of process.\1282\ Rule 15Ba1-6 also requires
a municipal advisor to file promptly a new Form MA-NR to reflect any
change to the name or address of the agent for service of process for
itself if the municipal advisor is a non-resident and for each of a
municipal advisor's non-resident general partners, managing agents, or
natural persons associated with the municipal advisor and engaged in
municipal advisory activities on its behalf.\1283\ The rule further
requires a registered non-resident municipal advisor to appoint
promptly a successor agent and file a new Form MA-NR if the non-
resident municipal advisor discharges its agent or if its agent becomes
unwilling or unable to accept service on behalf of the non-resident
municipal advisor.\1284\ Similarly, Rule 15Ba1-6(c)(2) provides that
each registered municipal advisor must require each of its non-resident
general partners or non-resident managing agents, or non-resident
natural persons

associated with the municipal advisor and engaged in municipal advisory
activities on its behalf to appoint promptly a successor agent and the
registered municipal advisor must file a new Form MA-NR if such non-
resident general partner, managing agent, or associated natural person
discharges the agent or if the agent is unwilling or unable to accept
service on behalf of such person. Rule 15Ba1-6 also requires each non-
resident municipal advisor applying for registration to provide an
opinion of counsel on Form MA that the municipal advisor can, as a
matter of law, provide the Commission with access to the municipal
advisor's books and records and that the municipal advisor can, as a
matter of law, submit to inspection and examination by the
Commission.\1285\ Finally, similar to the other forms in the MA series,
Form MA-NR must be filed electronically.\1286\
---------------------------------------------------------------------------

    \1281\ See Proposal, 76 FR 859.
    \1282\ See Rule 15Ba1-6(a)(1) and (2) (requiring a non-resident
municipal advisor to file a Form MA-NR on its own behalf and
requiring municipal advisors to file a Form MA-NR for each of the
municipal advisor's non-resident general partners, managing agents,
or natural persons associated with the municipal advisor and engaged
in municipal advisory activities on its behalf).
    \1283\ See Rule 15Ba1-6(b).
    \1284\ See Rule 15Ba1-6(c)(1).
    \1285\ See Rule 15Ba1-6(d). See also supra notes 1264-1265 and
accompanying text (discussing when a non-resident municipal advisory
firm must file an amendment to Form MA to attach an updated opinion
of counsel).
    \1286\ See Rule 15Ba1-6(e).
---------------------------------------------------------------------------

b. Form MA-NR
    The Commission received one comment letter on proposed Form MA-NR,
which generally supported Form MA-NR.\1287\ While Form MA-NR, as
adopted, retains the same purpose and focus of the proposed Form MA-NR,
the Commission is adopting Form MA-NR with certain modifications.
First, the Commission has provided more detailed instructions to
improve the form's readability and ease of use. For example, the
Commission included an introductory direction to refer to the General
Instructions for the forms in the MA series before completing Form MA-
NR, a paragraph explaining the purpose of the form, and a specific
instruction providing technical guidance for how to attach Form MA-NR
to Form MA or Form MA-I. Second, the Commission has expanded its
discussion of certain concepts in Form MA-NR so that persons executing
the form have a clearer and more complete understanding of the
information they are required to provide. For example, Section A of
Form MA-NR, as adopted, instructs the person executing the form to
``[i]dentify the agent for service of process for the non-resident
municipal advisor, for the non-resident general partner or managing
agent of a municipal advisor, or for the non-resident natural person
associated with the municipal advisor and engaged in municipal advisory
activities on its behalf. Fill in all lines.'' \1288\ The Commission
expanded the discussions in several other parts of Form MA-NR, such as
the description relating to the designation and appointment of the
agent for service of process immediately following the agent's address
and phone number in Section A.2, including language addressing the
effect on partnerships of the irrevocable power of attorney appointment
and consent to service of process, the designator's certification, and
the method by which the designator discloses the capacity in which he
or she is signing the form. Third, the Commission has included Section
B and Section C in Form MA-NR, as adopted. Section B requires the
municipal advisor to obtain the signature of the United States person
identified in Section A as the agent for service of process to
demonstrate that this person has accepted the designation and
appointment as the agent for service of process. This certification
that the agent for service of process has accepted the designation and
appointment is necessary to ensure effective service of process upon a
non-resident municipal advisor, non-resident general partner or
managing agent of a municipal advisor, or non-resident natural person
associated with the municipal advisor and engaged in municipal advisory
activities on its behalf. Additionally, the Commission believes that
the additional burden imposed on municipal advisors to obtain the
signature of the U.S. agent for service of process would be minimal.
Section C requires the person executing the form to disclose whether
any signature is pursuant to a written authorization and whether there
is a written contractual agreement or other written document evidencing
the designation and appointment of the named agent for service of
process and/or the agent's acceptance, and if so, to identify the
document and provide an accurate and complete copy with submission of
the Form MA or Form MA-I.
---------------------------------------------------------------------------

    \1287\ See MSRB Letter I.
    \1288\ Section A in Form MA-NR, as proposed, consisted only of
``Name of United States person applicant designates and appoints as
agent for service of process'' with space for the name provided in a
blank box immediately underneath.
---------------------------------------------------------------------------

    Pursuant to General Instruction 2, and consistent with the rule,
every non-resident municipal advisor must file Form MA-NR in connection
with the municipal advisor's initial application for registration on
Form MA and file a new Form MA-NR when required.\1289\ In addition,
regardless of whether a municipal advisory firm is a resident of the
United States, the firm must file a separately completed and executed
Form MA-NR for (i) non-resident general partners and managing agents of
the firm, and (ii) every non-resident natural person associated with
the firm and engaged in municipal advisory activities on the firm's
behalf.\1290\ Form MA-NR for general partners and managing agents is
filed by the firm together with the firm's Form MA.\1291\ Form MA-NR
for natural persons associated with the firm and engaged in municipal
advisory activities on the firm's behalf is filed by the firm together
with the Form MA-I relating to the natural person associated with the
firm.\1292\
---------------------------------------------------------------------------

    \1289\ See General Instruction 2.c. As discussed in the
Proposal, failure to attach a signed and notarized Form MA-NR, where
required, for a non-resident municipal advisor or for any non-
resident general partner or managing agent of a municipal advisory
firm or non-resident natural person associated with a municipal
advisor who engages in municipal advisory activities on behalf of
the advisor, may delay SEC consideration of the municipal advisor's
application for registration. Additionally, an SEC-registered
municipal advisory firm that becomes a non-resident after the
municipal advisor firm's initial application has been submitted must
file a Form MA-NR within 30 days of becoming a non-resident. The
same applies when a general partner or managing agent of a municipal
advisory firm becomes a non-resident, or a non-resident becomes a
general partner or managing agent of a municipal advisory firm,
after the firm's initial application. Also, a municipal advisory
firm must file a Form MA-NR together with Form MA-I if, after the
firm's initial registration, a non-resident natural person becomes
associated with the firm and engages in municipal advisory
activities on the firm's behalf. In addition, a municipal advisory
firm must file a form MA-NR if a natural person associated with the
firm and engaged in municipal advisory activities on behalf of the
firm becomes a non-resident after the firm has filed a Form MA-I
relating to that individual. The firm must file the Form MA-NR
within 30 days of such individual becoming a non-resident. See
Instruction 3 in the General Instructions to Form MA-NR. See also
Proposal, 76 FR 859, note 263.
    \1290\ See General Instruction 2.c.
    \1291\ See id.
    \1292\ See id.
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7. Rule 15Ba1-7: Registration of Successor to Municipal Advisor
    Proposed Rule 15Ba1-6 was designed to govern the registration of a
successor to a registered municipal advisor.\1293\

The rule is substantially similar to Rule 15b1-3 under the Exchange
Act, which governs the registration of a successor to a registered
broker-dealer.\1294\ The Commission received no comments on the
proposed Rule 15Ba1-6 and is adopting the rule as Rule 15Ba1-7 without
modification.
---------------------------------------------------------------------------

    \1293\ As discussed in the Proposal, the purpose of Rule 15Ba1-7
is to enable a successor municipal advisor to operate without an
interruption of business by relying for a limited period of time on
the registration of the predecessor municipal advisor until the
successor's own registration becomes effective. See Proposal, 76 FR
860. The rule is intended to facilitate the legitimate transfer of
business between two or more municipal advisors and to be used only
where there is a direct and substantial business nexus between the
predecessor and the successor municipal advisor. The rule is not
designed to allow a registered municipal advisor to sell its
registration, eliminate substantial liabilities, spin off personnel,
or facilitate the transfer of the registration of a ``shell''
organization that does not conduct any business. As discussed in the
Proposal, no entity is permitted to rely on Rule 15Ba1-7 unless it
is acquiring or assuming substantially all of the assets and
liabilities of the predecessor's municipal advisor business, or
there has been no practical change of control. See General
Instruction 1 to Form MA.
    The Commission will not apply Rule 15Ba1-7 to a reorganization
that involves only registered municipal advisors. See Proposal, 76
FR 860. In those situations, the registered municipal advisors need
not rely on the rule because they can continue to rely on their
existing registrations. The rule also will not apply to situations
in which the predecessor intends to continue to engage in municipal
advisory activities. Otherwise, confusion may result as to the
identities and registration statuses of the parties.
    \1294\ See 17 CFR 240.15b1-3. See also Registration of
Successors to Broker-Dealers and Investment Advisers, Exchange Act
Release No. 31661 (December 28, 1992), 58 FR 7 (January 4, 1993)
(providing interpretive guidance regarding amendments to Rule 15b1-
3).
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Succession by Application
    Rule 15Ba1-7(a) provides that in the event that a municipal advisor
succeeds to and continues the business of a municipal advisor
registered pursuant to Exchange Act Section 15B(a), the registration of
the predecessor will be deemed to remain effective as the registration
of the successor if the successor, within 30 days after the succession,
files an application for registration on Form MA and the predecessor
files a notice of withdrawal from registration with the Commission on
Form MA-W. The rule further provides that the registration of the
predecessor municipal advisor will cease to be effective as the
registration of the successor municipal advisor 45 days after the
application for registration on Form MA is filed by the
successor.\1295\ In other words, the 45-day period will not begin to
run until a complete Form MA has been filed by the successor with the
Commission. This 45-day period is consistent with Exchange Act Section
15B(a)(2), pursuant to which the Commission has 45 days to grant a
registration or institute proceedings to determine if a registration
should be denied.\1296\
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    \1295\ See Rule 15Ba1-7(a).
    \1296\ See 15 U.S.C. 78o-4(a)(2).
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Succession by Amendment
    Rule 15Ba1-7(b) provides that, notwithstanding Rule 15Ba1-7(a), if
a municipal advisor succeeds to and continues the business of a
registered predecessor municipal advisor, and the succession is based
solely on a change in the predecessor's date or state of incorporation,
form of organization, or composition of a partnership, the successor
may, within 30 days after the succession, amend the registration of the
predecessor municipal advisor on Form MA to reflect these changes. Such
an amendment will be deemed an application for registration filed by
the predecessor and adopted by the successor.
    In all three types of successions specified in Rule 15Ba1-7(b)
(change in the date or state of incorporation, change in form of
organization, and change in composition of a partnership), the
predecessor must cease operating as a municipal advisor. As stated in
the Proposal, the Commission believes that it is appropriate to allow a
successor to file an amendment to the predecessor's Form MA in these
types of successions because such successions do not typically result
in a change of control of the municipal advisor.\1297\
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    \1297\ See Proposal, 76 FR 860.
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8. General Instructions and Glossary
    The Commission proposed a set of instructions, which includes
general instructions for proper completion and submission of Forms MA,
MA-I, MA-W, and MA-NR (``General Instructions''),\1298\ as well as
specific instructions relating to each of the forms individually, as
applicable. A glossary of terms (``Glossary'') is included at the end
of the General Instructions to help applicants complete the forms. As
discussed in the Proposal, the definitions in the Glossary generally
are derived from the terms in Exchange Act Section 15B(e),\1299\ the
definitions in Rule 15Ba1-1,\1300\ and Form ADV.\1301\ For ease of
reference, the Commission proposed one Glossary to define terms that
may appear in any or all of the forms. All terms that are defined or
described in the Glossary appear in the forms in italics.
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    \1298\ Form MA-W is for withdrawal from registration as a
municipal advisor, and Form MA-NR is for the appointment of an agent
for service of process by a non-resident municipal advisor, non-
resident general partner or managing agent of a municipal advisor,
or non-resident natural person associated with a municipal advisor
and engaged in municipal advisory activities on behalf of the
municipal advisor. See supra Sections III.A.4.b. and III.A.6.
(discussing Forms MA-W and MA-NR, respectively).
    \1299\ See 15 U.S.C. 78o-4(e).
    \1300\ See Rule 15Ba1-1. See also Proposal, 76 FR 839.
    \1301\ See 17 CFR 279.1.
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    The Commission did not receive any comments on the General
Instructions and Glossary and is adopting the General Instructions and
Glossary generally as proposed. However, some revisions have been made
to clarify or modify instructions and definitions or to provide
additional guidance, as discussed more fully below. In particular, the
instructions are being revised to reflect that Form MA-I, as adopted,
will not serve as a registration form and that municipal advisory
firms, rather than natural persons (other than sole proprietors), have
the obligation to file and complete Form MA-I. In addition, some
sections of the General Instructions have been reorganized to enhance
their readability, three new instructions have been added, additional
defined terms have been introduced and included in the Glossary, and
one term has been removed from the Glossary.
    General Instruction 1, as proposed, directed applicants to the
Commission's Web site for additional information about the Commission's
rules regarding municipal advisors and the Exchange Act. General
Instruction 1, as adopted, notes that a comprehensive explanation of
the form requirements is provided in this release.
    General Instruction 2, as proposed, discussed who should file Form
MA and Form MA-I and explained that these forms must be used to
register with the Commission and to amend previously submitted Forms MA
and MA-I. The instruction also discussed the responsibility of sole
proprietors to file both forms. General Instruction 2, as proposed,
further included information regarding voluntary registration for
certain individuals; the requirement that a Form MA-NR must be
submitted for municipal advisors and general partners and managing
agents of municipal advisors that are not residents of the United
States; and the requirement that a municipal advisor that is no longer
required to be registered must file Form MA-W.
    As adopted, General Instruction 2 has been revised for clarity and
now also provides more details about the use of Form MA. For example,
it now notes the requirement for a municipal advisor that registers on
Form MA to submit an annual update of that form.\1302\
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    \1302\ The instruction, as proposed, referred only to
amendments, which may have implied that additional filings are
required only in the instance of changes in the information provided
on previously-submitted forms.
---------------------------------------------------------------------------

    General Instruction 2 has been revised to reflect the fact that
Form MA-I is no longer a registration form. It explains that municipal
advisory firms must complete and file Form MA-I on behalf of natural
persons associated with the firm and engaged in municipal advisory
activities on behalf of the firm, including employees of the firm. In

addition, General Instruction 2 notes that independent contractors are
included in the definition of ``employee'' of a municipal advisor for
purposes of a firm's obligation to complete and file Form MA-I.\1303\
The instruction explains that Form MA-I is also used to amend a
previously submitted Form MA-I.
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    \1303\ Although independent contractors are included in the
definition of employee for purposes of these forms in the Glossary
(as both proposed and adopted), their inclusion is noted in General
Instruction 2, as adopted, because it might otherwise be overlooked.
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    With regard to Form MA-NR, General Instruction 2 now more clearly
indicates that every municipal advisory firm must file with the firm's
Form MA a separately completed and executed Form MA-NR for every
general partner and/or managing agent of a firm that is a non-resident.
In addition, the instruction has been revised to indicate that
municipal advisory firms must also file Form MA-NR for every non-
resident natural person associated with the firm and engaged in
municipal advisory activities on the firm's behalf together with the
Form MA-I related to the person. General Instruction 2 indicates that
firms have an obligation to file Form MA-NR in these circumstances,
regardless of whether the firm itself is domiciled in the United States
or is a non-resident filing a Form MA-NR on its own behalf. In
addition, General Instruction 2 clarifies that a Form MA-NR for a non-
resident general partner or managing agent of a municipal advisor must
be filed with the Form MA of the municipal advisor. The instruction, as
adopted, also explains that, unlike the other forms in the Form MA
series, which are completed online and signed electronically, Form MA-
NR must be printed out and signed manually by both the non-resident and
the person designated as agent for service of process. Each of the
signatures must be separately notarized, and a scanned copy of the
signed and notarized form must then be attached as a PDF file to the
electronically-completed Form MA or Form MA-I. To emphasize the
importance of submitting a Form MA-NR, where required, General
Instruction 2, as adopted, includes a warning that failure to attach a
signed and notarized Form MA-NR for a non-resident municipal advisor,
any non-resident general partner or managing agent of a municipal
advisory firm, or non-resident natural person associated with a
municipal advisory firm who engages in municipal advisory activities on
behalf of the firm may delay Commission consideration of the municipal
advisor's application for registration.
    General Instruction 2 indicates that Form MA-W does not need to be
completed when a natural person with respect to whom a municipal
advisory firm filed Form MA-I is no longer associated with the firm or
no longer engaged in municipal advisory activities on behalf of the
firm. The instruction now explains that the firm must indicate this
change by filing an amendment to Form MA-I.
    The proposed instructions in General Instruction 2 regarding
voluntary registration as a municipal advisor have been deleted, as the
purpose for which this option was created is no longer relevant.\1304\
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    \1304\ The Commission notes that several commenters raised
concerns regarding the interaction of the Commission's proposed rule
regarding voluntary municipal advisor registration with amendments
that had been proposed in November 2010 to the Commission's ``Pay-
to-Play Rule.'' See, e.g., ICI Letter and MFA Letter. See also
Investment Advisers Act Release No. 3010 (November 10, 2010), 75 FR
77052 (December 10, 2010) (Pay-to-Play Proposed Amendments); and
Proposal, 76 FR 832 n.104 and accompanying text. The Commission
notes that it adopted amendments to its Pay-to-Play Rule on June 22,
2011. See Rules Implementing Amendments to the Investment Advisers
Act of 1940, Investment Advisers Act Release No. 3221 (June 22,
2011), 76 FR 42950 (July 19, 2011). As proposed, the amendments to
the Pay-to-Play Rule would have excepted only registered municipal
advisors from that rule's ban on compensating third-party
solicitors. If the amendments had been adopted as proposed, an
investment adviser may have been unable to hire an affiliated
solicitor to solicit government entities on its behalf (absent the
option for voluntary municipal advisor registration) because
affiliated solicitors would not fall within the statutory definition
of municipal advisor. The final amendments to the Pay-to-Play Rule,
however, permit advisers to compensate municipal advisors and
Commission registered investment advisers and broker-dealers for
soliciting government entities if they are subject to restrictions
substantially equivalent to or more stringent than the Pay-to-Play
Rule. See id. See also Rule 206(4)-5 under the Investment Advisers
Act (17 CFR 275.206(4)(5)). Consequently, the option of voluntary
registration as a municipal advisor for persons undertaking
solicitation of a municipal entity is no longer necessary.
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    General Instruction 3, as proposed, instructed applicants with
respect to the organization of Form MA (for example, that Form MA also
includes Schedules A, B, C, and D, as well as Criminal Action,
Regulatory Action, and Civil Judicial Action DRPs) and made clear that
an applicant must complete all items in Form MA. General Instruction 3
is being adopted substantially as proposed, with only minor revisions,
including an explanation that Form MA includes an ``Execution Page''
where the form is signed.
    General Instruction 4, as proposed, provided comparable
instructions with respect to the organization and completion of Form
MA-I and the schedules and the DRPs required by that form. General
Instruction 4 is being revised to state that Form MA-I asks questions
about sole proprietors and natural persons associated with a municipal
advisory firm and engaged in municipal advisory activities on behalf of
the firm, and to reflect the fact that Form MA-I, as adopted, is not a
registration form.
    General Instructions 5-7 are being adopted substantially as
proposed, with revisions to reflect the fact that municipal advisory
firms, not natural persons associated with the firms and engaged in
municipal advisory activities on behalf of the firms, must sign and
file Form MA-I. However, the order of these instructions has been
rearranged in their adopted version for purposes of clarity.
    First, General Instruction 5 (in the order as adopted) sets forth
who must sign Form MA or MA-I. General Instruction 5 explains that such
person will be a sole proprietor (in the case of a sole
proprietorship), a general partner (in the case of a partnership), an
authorized principal (in the case of a corporation), and, for all
others, an authorized individual who participates in managing or
directing the municipal advisor's affairs.\1305\ It further makes clear
that in all cases the signature should be a typed name. Next, General
Instruction 6 makes clear where Form MA must be signed, explaining that
domestic municipal advisors are required to execute the Domestic
Execution Page to Form MA, while non-resident municipal advisors are
required to execute the Non-Resident Municipal Advisor Execution
Page.\1306\ General Instruction 7 provides that a municipal advisory
firm signs Item 7 of Form MA-I.
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    \1305\ Because natural persons that are not sole proprietors are
not required to file Form MA-I, the part of General Instruction 5
set forth in the Proposal that stated that a natural person filing
Form MA-I on his or her own behalf must sign the form has been
deleted.
    \1306\ See supra Section III.A.6. (discussing Rule 15Ba1-6 and
Form MA-NR).
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    General Instructions 8 and 9 discuss when to amend and/or update
Forms MA and MA-I respectively, as discussed above.\1307\ General
Instruction 8 (which pertains to Form MA), has been adopted
substantially as proposed, but has been revised to distinguish more
clearly between an amendment and an annual update. To clarify how
amendments and updates will work in the electronic filing system, the
instruction also now explains that each time a firm accesses its Form
MA after its initial filing of the form, the

information from the firm's most recent previous filing will appear.
Only the information that has changed will need to be amended; the
applicant will not need to complete the entire form again. The
statement in General Instruction 8 regarding the requirement for a non-
resident municipal advisor to amend its form and attach an updated
opinion of counsel has been revised to more accurately reflect the
required content of the opinion of counsel as stated on Form MA.\1308\
General Instruction 9, as proposed, concerned when Form MA-I (for
natural person municipal advisors) needs ``to be updated.'' The
instruction has been revised in its adopted form to state generally
that Form MA-I must ``be amended'' whenever information previously
provided on the form becomes inaccurate.\1309\
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    \1307\ See supra Section III.A.5.
    \1308\ See supra note 1264 and accompanying text for the revised
language.
    \1309\ The instruction no longer states that every ``natural
person municipal advisor'' must amend Form MA-I because the rule, as
adopted, requires municipal advisory firms, and not natural persons
(other than sole proprietors), to complete and file Form MA-I. See
Rule 15Ba1-2(b)(1) of the adopted rules.
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    General Instruction 10, as proposed, provided that an applicant
must complete and file the forms electronically. As adopted, General
Instruction 10 provides that a municipal advisor must complete and
submit the relevant form, including any required attachments,
electronically. General Instruction 10 reflects the change to Rule
15Ba1-2(c), as adopted,\1310\ that Form MA is considered filed upon
submission of a completed Form MA, together with all additional
required documents, including all required filings of Form MA-I (17 CFR
249.1310), to EDGAR. General Instruction 10 also explains that when a
municipal advisor's submitted Form MA is accepted by the Commission,
the municipal advisor will receive an SEC file number. General
Instruction 11 is being adopted to provide more specific information
about how to electronically file the forms in the Form MA series and,
specifically, how to obtain access to EDGAR to do so.\1311\
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    \1310\ See supra note 971 and accompanying text.
    \1311\ See supra note 961. General Instructions 12 and 13 as
proposed, regarding self-certification by municipal advisors filing
on Form MA and Form MA-I, have been removed, because, as discussed
above, the Commission has eliminated the self-certification
requirement in Form MA and Form MA-I as adopted.
---------------------------------------------------------------------------

    A new General Instruction 12 has been added to the General
Instructions, as adopted, to clarify what a municipal advisor (or, in
the case of a firm, its authorized representative) represents by
signing and executing the form as a whole.\1312\ General Instruction 12
explains that, by signing the Execution Page of Form MA, the authorized
signatory of a domestic municipal advisory firm is appointing the
Secretary of State or other legally designated officer of the state in
which the firm maintains its principal office and place of business as
the firm's agent to receive service of process.\1313\ The signatory is
also attesting to the truth and correctness of the information provided
in the form and declaring that the firm's books and records will be
preserved and available for inspection and that any person having
custody of the books and records is authorized to make them available
to federal regulators.
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    \1312\ General Instruction 12 does not introduce new substantive
requirements that are being added in the adopting phase of this
rulemaking. They were set forth in the forms, as proposed, and are
now being added to the General Instructions in order to highlight
them for applicants preparing to file. See also supra notes 1150-
1156 and accompanying text.
    \1313\ See also supra notes 1275-1287 and accompanying text.
---------------------------------------------------------------------------

    General Instruction 12 further explains that a signatory on behalf
of a non-resident municipal advisory firm must use the version of the
Execution Page of Form MA that is specifically required for non-
resident firms. Besides attesting to the truth and correctness of the
information provided on the form and making the same representations as
a U.S. firm regarding books and records, the signatory on behalf of the
firm is agreeing to provide, at the firm's own expense, current,
correct, and complete copies of its books and records to the SEC upon
request. The instruction explains that a non-resident firm must
designate an agent for service of process on a separate form, Form MA-
NR.
    General Instruction 12 explains that an authorized signatory of a
domestic municipal advisory firm filing Form MA-I with respect to a
natural person who is associated with the firm and engaged in municipal
advisory activities on behalf of the firm, by signing the Execution
Page of Form MA-I, is attesting to the truth and correctness of the
information provided in the form. The instruction also explains that
the authorized signatory is attesting that the firm has obtained and
retained written consent from the natural person associated with the
firm that service of any civil action brought by, or notice of any
proceeding before, the SEC or any SRO in connection with the
individual's municipal advisory activities may be given by registered
or certified mail to the individual's address provided in Item 1 of the
form.
    General Instruction 12 further explains that by signing the
Execution Page of Form MA-I, a sole proprietor filing Form MA-I is
consenting that service of process may be given by registered or
certified mail to the address the sole proprietor has supplied in Item
1 of the form and is also attesting to the truth and correctness of the
information he or she has provided in the form.
    General Instruction 13, as adopted, (General Instruction 14 as
proposed) discusses the requirement for a non-resident municipal
advisory firm to attach a legal opinion to its Form MA that the
municipal advisor can, as a matter of law, provide the Commission with
access to its books and records and that the municipal advisor can, as
a matter of law, submit to inspection and examination by the
Commission.\1314\ As adopted, General Instruction 13 reflects the fact
that the opinion of counsel that non-residents must file no longer
needs to state that the municipal advisor can submit to ``onsite''
inspection and examination.\1315\
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    \1314\ See supra note 1154 and accompanying text.
    \1315\ See supra note 1280 and accompanying text.
---------------------------------------------------------------------------

    The Commission has also added new General Instruction 14 to list
together in one place all the circumstances in which additional
documents must be attached to a Form MA or Form MA-I. The list of such
documents does not include any new requirements that were not included
in the Proposal. General Instruction 14 has been added for purposes of
clarity and convenience. The required documents enumerated include: (1)
any documents relating to criminal actions, as specified in the
Criminal Action DRPs of Form MA and Form MA-I, and any other supporting
documentation; (2) a manually-signed Form MA-NR for each non-resident
for whom such form is required; \1316\ (3) any written document (e.g.,
board resolution or power of attorney) authorizing a signatory to sign
a Form MA-NR; and (4) any written contractual agreements relating to
Form MA-NR; and (5) the required opinion of counsel for non-resident
municipal advisory firms.
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    \1316\ Form MA-NR, by which a non-resident municipal advisor
designates an agent for service of process in the U.S., is accessed
electronically via links within Form MA and Form MA-I. The
information requested by the form may be entered online. However,
the form must be printed out and signed manually--both by the
applicant (an authorized signatory in the case of a firm) and by the
designated agent for service of process--and each of the signatures
must be notarized. After the signatures and notarizations are
completed, Form MA-NR must be attached in PDF format to the Form MA
or Form MA-I.
---------------------------------------------------------------------------

    The Commission has added new General Instruction 15 to provide
clarity

with respect to filing deadlines. General Instruction 15 provides that
if the deadline for submitting an initial filing, annual update, or
amendment to a form occurs on a Saturday, Sunday, or holiday on which
the Commission is not open for business, then the deadline shall be the
next business day.
    The General Instructions also provide some instructions and
explanations specific to certain items in Form MA and Form MA-I.\1317\
In addition, the General Instructions provide some instructions and
explanations specific to Form MA-NR. Specific Instruction 1 for Form
MA, as adopted, explains that a municipal advisor that is not currently
registered as a municipal advisor and has taken over the business of
another municipal advisor or was registered as a municipal advisor but
has changed its structure or legal status will be a new organization
with registration obligations under the Exchange Act.\1318\ It further
explains that an applicant not registered with the SEC as a municipal
advisor that is acquiring or assuming substantially all of the assets
and liabilities of the advisory business of a registered municipal
advisor will be required to file a new application for registration on
Form MA within 30 calendar days after the succession. The instruction
also provides that, once the new registration is effective, Form MA-W
(as described above) must be filed to withdraw the registration of the
acquired municipal advisor. The instruction also explains that, if a
new municipal advisor is formed solely as a result of a change in the
form of organization or in the composition of a partnership or the date
or the state of incorporation, and there has been no practical change
in control or management, the applicant will be permitted to amend the
existing registration to reflect the changes by filing an amendment
within 30 calendar days after the change or reorganization.
---------------------------------------------------------------------------

    \1317\ As proposed, the sections of the General Instructions
that explained how to complete certain items in Form MA and Form MA-
I did not have names. As adopted, these sections are now called
``Specific Instructions for Certain Items in Form MA'' and
``Specific Instructions for Certain Items in Form MA-I.''
    \1318\ Specific Instruction 1 for Form MA as adopted has been
significantly revised for purposes of clarity but includes no
substantive changes. See also infra Section III.A.7, regarding Rule
15Ba1-7, adopted as part of this rulemaking, upon which this
instruction is based.
---------------------------------------------------------------------------

    Specific Instruction 2 for Form MA is being adopted substantially
as proposed and has been revised only for clarity and to correct
certain citations that have changed. The instruction provides guidance
for newly-formed municipal advisors regarding how to respond to several
questions in Item 4 of Form MA (described above) that may be difficult
to answer when the applicant for registration has not been in existence
for a significant amount of time. The instruction advises that, for a
newly-formed municipal advisor, responses should reflect the
applicant's current municipal advisory activities (i.e., its activities
at the time of filing, with certain exceptions). With respect to
specified questions regarding the applicant's compensation
arrangements, the instructions provide that the applicant base its
responses on the types of compensation it expects to accept. Further,
with respect to its business activities relating to municipal
securities, the applicant is instructed to base its responses on the
types of municipal advisory activities in which it expects to engage
during the next year.
    Specific Instruction 3 for Form MA is being adopted substantially
as proposed, with non-substantive revisions. The instruction explains
that Schedule D is to be completed if any response to Form MA requires
further explanation, or if the applicant wishes to provide additional
information.
    The Specific Instructions for Certain Items in Form MA-I, as
adopted, have been revised to reflect the fact Form MA-I is not a
registration form and that municipal advisory firms, rather than
natural persons (other than sole proprietors), have the obligation to
complete and file Form MA-I. Specific Instruction 1 for Form MA-I
explains that, in Item 1 of Form MA-I, the municipal advisory firm must
enter the individual's CRD Number (if assigned), the individual's
social security number,\1319\ and the addresses of all offices at which
the individual is or will be physically located or from which the
individual is or will be supervised, even if the individual does not
work at that location.\1320\
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    \1319\ As discussed above, social security numbers will not be
made publicly available. This information is necessary in connection
with the Commission's enforcement and examination functions pursuant
to Section 15B(c) of the Exchange Act (15 U.S.C. 78o-4(c)). See
Proposal, 76 FR 840, note 171.
    \1320\ General Instruction 1 to Form MA-I in its adopted form
has been expanded to provide more explanation for a firm that
submits Form MA-I on behalf of natural persons associated with the
firm and engaged in municipal advisory activities on the firm's
behalf, but no new requirements have been added.
---------------------------------------------------------------------------

    Specific Instruction 2 for Form MA-I is being adopted substantially
as proposed, with revisions made for clarity. The instruction
emphasizes that, for purposes of completing Item 2 to Form MA-I, the
firm must enter all the other names that the individual is using, has
used, is known or has been known by, other than the individual's legal
name, since the age of 18, which includes nicknames, aliases, and names
used before and after marriage.
    Specific Instruction 3 for Form MA-I is being adopted substantially
as proposed, but expanded with more information. The instruction
explains that, for purposes of Item 3, with respect to the individual's
residential history for the past 5 years, post office boxes may not be
used to complete the response and the firm may not leave any gaps in
the individual's residential history greater than three months. As
adopted, this instruction also includes the statement: ``This
information is needed for regulatory purposes. However, the version of
completed Form MA-I that will be available for viewing by the public
will not show the private residential addresses that you enter.''
    Specific Instruction 4 for Form MA-I is being adopted substantially
as proposed, with an added clarification. The instruction provides
that, with respect to Item 4 of Form MA-I, the individual's employment
history for the past 10 years must be provided with no gaps greater
than three months; that the history should account for full-time and
part-time employment, self-employment, military service and homemaking;
and that unemployment, full-time education, extended travel, and other
similar statuses should be included. The added clarification explains
that such statuses should be entered on the line provided for ``Name of
Municipal Advisor or Company.''
    Specific Instruction 5 for Form MA-I, regarding Item 5 of Form MA-I
(``Other Business''), has been revised in its adopted version. Instead
of restating, as proposed, some of the information requests specified
in Item 5, the instruction explains that other businesses in which the
individual ``is engaged'' is intended to capture such engagements as a
proprietor, partner, officer, director, or employee (including
independent contractor, trustee, agent or otherwise). As adopted, the
instruction also informs firms that if the number of hours per week
that individuals devote to the other business varies, the firms should
provide an average.
    Specific Instruction 6 for Form MA-I, regarding Item 6 of Form MA-
I, is being adopted as proposed. The instruction advises firms that
affirmative responses to certain disclosure questions in the form could
make an individual subject to a statutory disqualification.
    Specific Instruction 7 for Form MA-I is being adopted as proposed,
with an

added reminder for non-residents. The instruction indicates that, as
with Form MA, the form is to be signed (in Item 7 of Form MA-I) by
typing a signature in the designated field and makes clear that, by
typing a name, the signatory acknowledges and represents that the entry
constitutes in every way, use, or aspect, his or her legally binding
signature. The added reminder advises the firm that if the individual
is a non-resident, the firm must attach a manually-signed Form MA-NR to
the form.
    The General Instructions contain a new section called ``General
Instructions to Form MA-NR'' that consists of instructions and
explanations specific to Form MA-NR. General Instruction 1 to Form MA-
NR repeats the information in General Instruction 2, discussed above,
regarding when Form MA-NR must be filed.
    General Instruction 2 to Form MA-NR describes the circumstances in
which more than one Form MA-NR must be filed by a municipal advisory
firm. For example, the instruction states that a non-resident municipal
advisory firm filing a Form MA for itself would also need to file Form
MA-NR for each of its non-resident general partners and managing
agents, even if a Form MA-NR had been previously filed by another
municipal advisor for the general partner or managing agent. In
addition, a firm filing Form MA-I must attach Form MA-NR for every non-
resident natural person associated with the firm and engaged in
municipal activities on the firm's behalf.
    General Instruction 3 to Form MA-NR describes when a Form MA-NR
must be filed at times other than when a municipal advisor submits its
initial application for registration. The instruction explains that a
registered municipal advisory firm must file a Form MA-NR within 30
days of the firm becoming a non-resident. The same applies when a
general partner or managing agent of the municipal advisory firm
becomes a non-resident, or a non-resident becomes a general partner or
managing agent of the firm after the firm's initial application for
registration. In such cases, the municipal advisor must file an
amendment to Form MA with the new Form MA-NR attached. The instruction
explains that a municipal advisory firm must also file Form MA-NR with
Form MA-I if, after the firm's initial registration, a non-resident
natural person becomes associated with the firm and engages in
municipal advisory activities on the firm's behalf. In addition, a firm
must file Form MA-NR if a natural person associated with the firm and
engaged in municipal advisory activities on behalf of the firm becomes
a non-resident after the firm has filed Form MA-I relating to that
individual. The firm must file Form MA-NR within 30 days of the
individual becoming a non-resident.\1321\
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    \1321\ General Instruction 3 to Form MA-NR also contains a note
reminding non-resident municipal advisory firms of two additional
requirements for non-resident municipal advisory firms that are
discussed in General Instruction 12 (to complete Form MA Execution
Page for non-residents and the undertaking regarding books and
records) and General Instruction 13 (to attach an opinion of counsel
that the firm can provide the Commission with access to its books
and records and can submit to inspection and examination by the
Commission).
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    General Instruction 4 to Form MA-NR describes when a new Form MA-NR
must be filed. The instruction indicates that a new Form MA-NR must be
filed promptly if a previously-filed Form MA-NR becomes invalid or
inaccurate.\1322\ This includes any change to the name or address of
the non-resident municipal advisory firm, general partner, managing
agent, or natural person associated with the firm and engaged in
municipal advisory activities on behalf of the firm, or any change to
the name or address of the agent of service of process of such non-
resident, to which the previously-filed Form MA-NR relates. The
instruction explains that a non-resident must promptly appoint a
successor agent for service of process and the municipal advisor must
file a new Form MA-NR if the non-resident discharges its identified
agent for service of process or if its agent for service of process
becomes unwilling or unable to accept service on behalf of the non-
resident.
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    \1322\ A new Form MA-NR is filed by submitting an amendment to
Form MA with a new Form MA-NR attached.
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    In the Proposal, the term ``non-resident'' was defined as an
individual, corporation, or partnership or other unincorporated
organization or association that resides in or has his or its principal
office and place of business in ``any place not in the United States.''
As adopted, the language in the term ``non-resident'' that determines
whether an individual, corporation, or partnership or other
unincorporated organization or association is a ``non-resident'' has
been slightly modified to whether the person resides in or has his or
its principal office and place of business in ``any place not subject
to the jurisdiction of the United States.'' The language has been
changed to clarify that persons that reside or have their principal
office and place of business in United States territories do not fall
within the definition of ``non-resident.''
    The Glossary of Terms is being adopted substantially as proposed.
However, the Glossary, as adopted, contains some revisions that are
being made for clarity. As adopted, the Glossary includes some
revisions to terms that reflect changes to the definitions being
adopted in Rule 15Ba1-1. For example, the definition of ``Guaranteed
Investment Contract'' has been revised to clarify that the contract at
issue must relate to investments of proceeds of municipal securities or
municipal escrow investments. The definition of the term ``municipal
advisor,'' as adopted, has been revised to make clear that the
definition is subject to the exclusions that are being adopted under
Rule 15Ba1-1(d)(2) \1323\ and the exemptions under Rule 15Ba1-
1(d)(3).\1324\ Likewise, the definition of the term ``obligated
persons,'' consistent with the definition in adopted Rule 15Ba1-1, has
been revised to state that the term does not include a person whose
financial information or operating data is not material to a municipal
securities offering or the federal government. The Glossary contains
other revisions to terms that are consistent with revisions to the
definitions in Rule 15Ba1-1, as adopted.
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    \1323\ 17 CFR 240.15Ba1-1(d)(2).
    \1324\ 17 CFR 240.15Ba1-1(d)(3).
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    The Glossary includes some new definitions that were not in the
Proposal. For example, the Glossary now defines the term ``federal
regulatory agency'' to include any federal banking agency and the
National Credit Union Administration. The Glossary also defines the
term ``state regulatory agency'' to include any State securities
commission (or any agency or officer performing like functions); State
authority that supervises or examines banks, savings associations, or
credit unions; or State insurance commission (or any agency or office
performing like functions to the above). The definitions of the terms
``federal regulatory agency'' and ``state regulatory agency'' are
consistent with the language in Exchange Act Section 15(b)(4)(H).\1325\
The Glossary has also been revised to include a new definition of the
term ``affiliate, affiliated, affiliation,'' which is derived from the
definition of ``advisory affiliate'' for Form ADV.
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    \1325\ The statutory disqualification language of Section
15(b)(4)(H) is referenced in Exchange Act Section 15B(c)(2), which
describes the Commission's power to censure, place limitations on
the activities, functions, or operations, or suspend, or revoke the
registration of a municipal advisor.
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    The term ``natural person municipal advisor'' has been removed from
the Glossary, as adopted. In the Proposal,

the term was defined to mean any natural person that is a municipal
advisor, including sole proprietors. The term had been included in the
Proposal to collectively describe natural persons who were required to
file Form MA-I. Because municipal advisory firms, rather than natural
persons (other than sole proprietors), are now responsible for filing
Form MA-I, the term is no longer necessary, and is therefore being
removed from the Glossary.
9. Rule 15Bc4-1: Persons Associated With Municipal Advisors
    As noted in the Proposal, Section 975(c)(5) of the Dodd-Frank Act
provides the Commission with authority to censure or place limitations
on the activities or functions of any person associated with a
municipal advisor or to suspend or bar any such person from being
associated with a municipal advisor. As discussed in the Proposal,
however, it appears that a technical error was made in the final draft
of this provision.\1326\ Specifically, Section 975(c)(5) of the Dodd-
Frank Act provides that Section 15B(c)(4) of the Exchange Act be
amended ``by inserting `or municipal advisor' after `municipal
securities dealer or obligated person' each place that term appears.''
\1327\ At the time the Dodd-Frank Act was enacted, however, Section
15B(c)(4) of the Exchange Act included the term ``municipal securities
dealer,'' but did not include the phrase ``municipal securities dealer
or obligated person'' (emphasis added).
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    \1326\ See Proposal, 76 FR 850, n.233.
    \1327\ See Section 975(c)(5) of the Dodd-Frank Act.
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    To address any ambiguity created by this error, the Commission
stated in the Proposal its intent to recommend a technical amendment to
Section 975(c)(5) of the Dodd-Frank Act.\1328\ To date, however, the
Exchange Act has not been amended to correct this technical error.
Therefore, to clarify the Commission's interpretation of Section
15B(c)(4) of the Exchange Act, the Commission is adopting new Rule
15Bc4-1 to make clear the Commission's understanding of its authority
with respect to associated persons of municipal advisors. Specifically,
Rule 15Bc4-1 states that the Commission has the authority to, by order,
censure or place limitations on the activities or functions of any
person associated, seeking to become associated, or, at the time of the
alleged misconduct, associated or seeking to become associated with a
municipal advisor, or suspend for a period not exceeding 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, if the Commission finds, on the record after notice and
opportunity for hearing, that such censure, placing of limitations,
suspension, or bar is in the public interest and that such person has
committed any act, or is subject to an order or finding, enumerated in
subparagraph (A), (D), (E), (H), or (G) of paragraph (4) of Section
15(b) of the Exchange Act, has been convicted of any offense specified
in subparagraph (B) of such paragraph (4) within 10 years of the
commencement of the proceedings under section 15B(c)(4) of the Exchange
Act, or is enjoined from any action, conduct, or practice specified in
subparagraph (C) of Section 15(b)(4). Rule 15Bc4-1 also states the
Commission's interpretation that Section 15B(c)(4) of the Exchange Act
makes it unlawful for any person, as to whom an order is entered
pursuant to Section 15B(c)(4) or Section 15B(c)(5) of the Exchange Act
suspending or barring him from being associated with a municipal
advisor is in effect, willfully to become, or to be, associated with a
municipal advisor without the consent of the Commission. Further, Rule
15Bc4-1 sets forth the Commission's understanding that it is unlawful
for any municipal advisor to permit such a person to become, or remain,
an associated person without the consent of the Commission, if such
municipal advisor knew, or, in the exercise of reasonable care should
have known, of such order. Not only does the Commission believe that
such interpretation is the only one that is consistent with the
Congressional intent underlying Section 975(c)(5) of the Dodd-Frank
Act, and that any other reading would produce the absurd result that no
amendment would be made to Section 15(c)(4) of the Exchange Act, but
the Commission also believes that this interpretation and the adoption
of Rule 15Bc4-1 are necessary and appropriate to ensure that the
Commission may censure or place limitations on the activities or
functions of any person associated with a municipal advisor or to
suspend or bar any such person from being associated with a municipal
advisor.
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    \1328\ See Proposal, 76 FR 850, n.233.
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B. Approval or Denial of Registration

    As discussed in the Proposal,\1329\ Exchange Act Section 15B(a)(2)
provides that within forty-five days of the filing of an application to
register as a municipal advisor,\1330\ the Commission must either:
``(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.'' \1331\
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    \1329\ See id., at 860.
    \1330\ The statute allows for a longer period if the applicant
consents. See 15 U.S.C. 78o-4(a)(2).
    \1331\ See 15 U.S.C. 78o-4(a)(2).
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    In accordance with Exchange Act Section 15B(a)(2), the Commission
will grant the registration of a municipal advisor if the Commission
finds that the requirements of Section 15B of the Exchange Act are
satisfied. The Commission will deny the registration of a municipal
advisor if the Commission does not make such a finding or if it finds
that, if the applicant were registered, its registration would be
subject to suspension or revocation under Section 15B(c) of the
Exchange Act.\1332\
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    \1332\ See 15 U.S.C. 78o-4(c).
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    As discussed in the Proposal, the information currently required by
Form MA-T is not reviewed by the Commission prior to registration,
although the Commission retains full authority to review such
information and examine any registered municipal advisor at any
time.\1333\ The Commission intends that the permanent registration
process will entail a review of each filed Form MA.
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    \1333\ See Proposal, 76 FR 860.
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    In considering whether to grant an application for registration as
a municipal advisor, the Commission will review the information
provided on Form MA. For example, as discussed in the Proposal, the
Commission may perform cross checks of applicants through the use of
the applicant's other registration numbers, such as its CRD or other
SEC registration numbers, to the extent available.\1334\ Also, the
Commission may review the disclosures required by Item 9 of Form MA,
including the disciplinary history of an applicant.\1335\ In addition,
as discussed

in the Proposal, the municipal advisor registration process will allow
the Commission and staff to ask questions and, as needed, to request
amendments before granting an application for registration.\1336\
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    \1334\ See id.
    \1335\ See id.
    \1336\ See id.
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C. Rule 15Ba1-8: Books and Records To Be Made and Maintained by
Municipal Advisors

    Section 17(a)(1) of the Exchange Act provides, in pertinent part,
that all registered municipal advisors shall make and keep for
prescribed periods such records, furnish such copies thereof, and make
and disseminate such reports as the Commission, by rule, prescribes as
necessary or appropriate in the public interest, for the protection of
investors, or otherwise in furtherance of the purposes of the Exchange
Act.\1337\ With proposed Rule 15Ba1-7, the Commission proposed to
specify the books and records requirements applicable to municipal
advisors.\1338\ The Commission is adopting Rule 15Ba1-7 as proposed,
but renumbered as Rule 15Ba1-8, with a few technical clarifications,
the addition of general ledgers, and the addition of written consents
to service of process from certain natural persons.
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    \1337\ See 15 U.S.C. 78q(a)(1).
    \1338\ See Proposal, 76 FR 860-862. In addition, Section
15B(b)(2)(G) of the Exchange Act provides that the rules of the MSRB
shall ``prescribe records to be made and kept by . . . municipal
advisors and the periods for which such records shall be
preserved.'' 15 U.S.C. 78o-4(b)(2)(G).
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Record-Keeping for Municipal Advisors
    As discussed in the Proposal, the Commission based Rule 15Ba1-7(a)
(as adopted, Rule 15Ba1-8(a)) generally on the books and records
requirements for broker-dealers and investment advisers.\1339\ Rule
15Ba1-8(a), among other things, requires a municipal advisory firm to
make and keep true, accurate, and current certain books and records
relating to its municipal advisory activities.\1340\ Specifically, Rule
15Ba1-8(a) requires all municipal advisory firms to make and keep
originals or copies of all written communications received, and
originals or copies of all written communications sent, by such
municipal advisor (including inter-office memoranda and communications)
relating to municipal advisory activities, regardless of the format of
the communications.\1341\ Municipal advisory firms also must keep all
check books, bank statements, general ledgers,\1342\ cancelled checks,
and cash reconciliations; a copy of each version of the municipal
advisor's policies and procedures, if any, that (i) are in effect or
(ii) at any time within the last five years were in effect (not
including those in effect prior to the effective date of Rule 15Ba1-8);
and a copy of any document created by the municipal advisor that was
material to making a recommendation to a municipal entity or obligated
person that memorializes the basis for that recommendation. In
addition, a municipal advisory firm must keep all written agreements
(or copies thereof) entered into by the municipal advisor with any