ASPPA & NTSAA Request Municipal Advisor Exemption

Melinda | April 14, 2011 | 0 Comments

Registration of Government Retirement Plan Advisors
Exceeds Dodd-Frank Mandate

ARLINGTON, VA, (April 14, 2011) – The following is a statement from Craig P. Hoffman, General Counsel and Director of Regulatory Affairs of The American Society of Pension Professionals & Actuaries (ASPPA) in response to the request for comment from the U.S. Securities and Exchange Commission (SEC) on Release No. 34-63576 for Registration of Municipal Advisors.

“ASPPA and the National Tax Sheltered Accounts Association (NTSAA) express concern with regard to how the application of proposed new rules 15Ba1-1 through 15Ba1-7 under the Securities Exchange Act of 1934, will impact retirement plan professionals who work with governmental sponsored retirement plans.

We believe that the Dodd-Frank Wall Street Reform and Consumer Protection Act was not intended to extend the municipal advisor registration requirements to those who work with governmental retirement and savings plans. This is particularly true for governmental retirement savings plans funded exclusively with employee contributions. Similarly, providers of advice and information to the participants in governmental retirement and savings plans should not be subject to registration as municipal advisors.

Many professionals that work with participants in governmental defined contribution 403(b), 401(a), 457 and traditional retirement plans are not engaging in ‘municipal advisory activities.’ For example, many of our members work with teachers in public schools who participate in a 403(b) savings plan sponsored by their school district. In many cases, these plans require employees to direct how their accounts will be invested among the options that are offered. In situations such as these, our members provide a wide range of participant advisory services such as general investment education, computer investment modeling and individual investment advice which may be provided by investment advisers and their associated persons which are not required (or permitted) to register with the Commission.

If the Act’s registration requirements were to be applied in this context, it would have a severe chilling effect on the availability of this much needed service, and may cause a market disruption in favor of larger, SEC-registered investment advisors by subjecting only smaller, local investment advisors to the municipal advisor registration requirements and associated MSRB rules. Clearly, a law aimed at regulating the practices associated with municipal bonds should not be applied inappropriately and inconsistently to those advising participants in governmental retirement and savings arrangements.

ASPPA and NTSAA recommend that the Proposed Rule be clarified to exclude advice given to participants in governmental retirement or savings arrangements sponsored by municipal entities, and that state-registered investment advisers be exempt from the definition of “municipal advisor” to the extent they are providing advice that otherwise would be subject to the Investment Advisers Act, but for the operation of a prohibition to, or exemption from, Commission registration.”

For more detail on ASPPA’s recommendations read our comment letter filed with the SEC.

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About ASPPA: The American Society of Pension Professionals & Actuaries(ASPPA) is a national organization of more than 7,500 retirement plan and benefits professionals that serves as the educator, voice, and advocate for the employer-based retirement system. ASPPA members are administrators, actuaries, advisors, attorneys, accountants, and other financial services professionals who provide consulting and administrative services for qualified retirement plans.

About NTSAA: The National Tax Sheltered Accounts Association (NTSAA) is the only independent, non-profit association dedicated to the 403(b) and 457 marketplaces in the nation and represents practitioners, agencies, corporate, and employer members. The NTSAA mission is to provide members with high quality education, technical support, and information resources, as well as to offer a professional networking forum.


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