Dodd-Frank Financial Reform and Affect on Municipal Securities

by Stacey H. Crawshaw-Lewis, Deana L. S. Gregory, and Carol Juang McCoog


On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). The Dodd-Frank Act includes several provisions of potential interest to participants in the municipal bond market. The Dodd-Frank Act will require registration and regulation of previously unregulated swap and other municipal advisors. The Dodd-Frank Act also addresses the composition and authority of the Municipal Securities Rulemaking Board (the "MSRB") and funding of the Governmental Accounting Standards Board ("GASB"). Finally, the Dodd-Frank Act directs a number of studies regarding the municipal securities market, including a study to address "the advisability of the repeal or retention of" the Tower Amendment.

Registration and regulation of municipal advisors.

Under the Dodd-Frank Act, swap and other municipal advisors are subject to three key requirements: registration, antifraud provisions, and a fiduciary duty to their clients.

The Dodd-Frank Act makes it unlawful for "a municipal advisor to provide advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person, unless the municipal advisor is registered." The Dodd-Frank Act includes an antifraud provision specifically applicable to municipal advisors, and provides that municipal advisors have a fiduciary duty to any municipal entity for whom such municipal advisor acts as a municipal advisor.

A municipal advisor is defined to include persons soliciting or providing advice to or on behalf of a municipal entity or obligated person with respect to municipal financial products (including municipal derivatives, guaranteed investment contracts, and investment strategies) or the issuance of municipal securities. The definition includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and swap advisors providing such advice. Broker-dealers, underwriters, engineers and attorneys providing legal advice are specifically excluded from the definition of municipal advisor. [footnote omitted]

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Stacey H. Crawshaw-Lewis is a partner in the Seattle office of K&L Gates. A former city housing and human services planner, Ms. Crawshaw-Lewis practices municipal finance and general municipal law. She has completed financings for a wide range of public entities, including cities, ports, housing authorities, higher education institutions, public utility districts, public development authorities and state agencies. She also advises a number of public facilities districts, public development authorities and other public-private ventures, including "63-20" financings. She has an additional focus on interest rate swap and other derivative transactions. Access Stacey H. Crawshaw-Lewis Martindale-Hubbell profile at

Deana L. S. Gregory is a partner in the Seattle office of K&L Gates, where she practices municipal finance and general municipal law. She has worked on financings for a variety of public entities. Her experience includes serving as bond counsel, underwriter's counsel, and disclosure counsel on financing matters, and as outside counsel to public entities on general municipal matters. She also has experience with Washington legislation and federal and blue sky securities law. Prior to joining K&L Gates, Ms. Gregory worked at the King County Prosecuting Attorney's Office. Access Deana L. S. Gregory Martindale-Hubbell profile at

Carol Juang McCoog is a partner in the Portland office of K&L Gates, working with a wide range of cities, counties, school districts, fire districts, urban renewal agencies and Oregon state agencies. Ms. McCoog currently serves as primary bond counsel for a number of issuers, including Deschutes County, Tigard-Tualatin School District No. 23J, and the Oregon Business Development Department's Bond Bank Program. She is also the primary bond counsel for the Oregon Express Bond Program of the Oregon Business Development Department (issuer of conduit industrial development revenue bonds) and the Small Non-Profit Accelerated Program (SNAP) of the Oregon Facilities Authority (issuer of conduit 501(c)(3) bonds). She also works as underwriter's counsel on a variety of public financings. Access Carol Juang McGoog Martindale-Hubbell profile at