BDA today sent a letter to SEC Chairman Jay Clayton on the Temporary Conditional Exemption the SEC issued in June related to the role of Municipal Advisors on certain municipal private placements. In our letter, we asked Chairman Clayton to allow the Exemption to expire at the end of the year as scheduled.
The letter can be viewed here.
The Exemption permits municipal advisors to solicit bank and credit union investors, traditionally a broker-dealer function, for certain municipal private placements subject to specified conditions. In announcing the exemption in June, the SEC stated it is intended to assist issuers facing financing constraints as a result of the COVID-19 pandemic. The Exemption is due to expire after December 31, 2020. In congressional testimony this summer, Chairman Clayton hinted that the SEC may extend the Exemption past its scheduled expiration date. The Exemption has not been widely used since its announcement.
In our letter we urge the SEC to allow the Exemption to expire as scheduled because it has not been widely used, is not necessary for the context of COVID, and threatens long-standing investor protection regulations. We argue that the municipal market has recovered from its disruption in June and that issuers are obtaining good execution for primary market offerings in recent months.
We will continue to press the SEC on the temporary Exemption as the December 31 deadline approaches. As always please write or call with any questions or thoughts.