Municipal Adviser FAQs Offer Some Advice vs. Information Guidance
The SEC’s Office of Municipal Advisors issued Frequently Asked Question responses, offering guidance to distinguish general information from advice. The SEC staff said that, although the distinction between advice (requiring registration) and information is a fact-based analysis, the staff offered some specific examples of permitted information: market statistics, a description of currently-available investments, and an outline of various financing structures including the advantages and disadvantages. The staff warned that more particularized information tends toward becoming a recommendation. The staff also indicated that specific disclosures that the information provided is not intended to be a recommendation will help. The staff also explained that a registered adviser can advise on investment portfolio derivatives without registering as a municipal adviser so long as the advice does not involve the issuance of municipal derivatives. The FAQs also address underwriting issues, RFP responses, and post-issue advice.
OUR TAKE: The staff has struck a good balance because if they interpreted “advice” too broadly, they would limit the information that municipal entities could obtain from market participants.