Securities Regulation Daily Wrap Up, MUNICIPAL SECURITIES NEWS—SEC clarifies non-solicitor municipal advisor’s role in disclosures, (Sep 17, 2026)

By Suzanne Cosgrove

Participating in the preparation of disclosure documents constitutes “municipal advisor activity” when it’s within the scope of the relationship between the advisor and the municipal entity or obligated person.

The SEC’s Office of Municipal Securities has published its views on the obligations of a municipal advisor under the Securities Acts of 1933 and 1934, as amended.

The detailed document addresses a municipal advisor’s role in preparing a municipal entity or obligated person’s primary and secondary market disclosure documents, a role that can vary from no participation to primary drafting responsibility, and is based on the Exchange Act, the Securities Act, the Municipal Advisor Adopting Release, and prior Commission actions and guidance.

The staff statement includes a discussion of nearly a dozen related subjects. Several are highlighted below:

Defining advice. Participation in the preparation of disclosure documents can constitute “advice” and “municipal advisory activity” for purposes of the municipal advisor definition.

The Commission has stated that the term “advice” includes, without limitation, recommendations geared to the specific needs, objectives, or circumstances of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities, including with respect to the structure, timing, terms, and similar matters concerning financial products or issues.

In the staff’s view, participating in the preparation of disclosure documents also constitutes “municipal advisor activity” when it is within the scope of the relationship between the municipal advisor and the municipal entity or obligated person, and otherwise constitutes “advice.”

For example, it’s considered assistance when the adviser assists municipal entities in developing a financing plan or helps municipal entities evaluate different financing options and structures or assists in the selection of other parties to the financing, such as bond counsel and underwriters.

Disclosure and securities laws. The Commission indicated that municipal advisors “may” assist municipal entities and obligated persons in ensuring adequate disclosure. but are not required to participate in the preparation of disclosure documents.

The Municipal Advisor Adopting Release does not specifically address whether or when taking actions to ensure adequate disclosure constitutes municipal advisor activity.

A municipal advisor’s participation in the preparation of disclosure documents may constitute advice because structure, timing, terms, and other similar matters are frequently described in disclosure documents such as preliminary and final official statements.https://www.sec.gov/newsroom/speeches-statements/oms-statement-non-solicitor-municipal-advisors-091626#_ftn12

The staff also noted that municipal advisors participating in the preparation of disclosure documents are subject to federal securities laws. All persons, including municipal advisors, are subject to the provisions of Securities Act Section 17(a), Exchange Act Section 10(b)[ and Exchange Act Rule 10b-5 relating to fraud in the offer or sale of securities[ or in connection with the purchase or sale of securities (antifraud provisions).

Violations of some anti-fraud provisions require that the violator acted with scienter, but others do not. Scienter is a required element of a violation of Section 17(a)(1) of the Securities Act or Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. No scienter requirement exists for violations of Sections 17(a)(2) or 17(a)(3) of the Securities Act; negligence alone is sufficient.[

A municipal advisor could therefore be subject to primary or secondary liability under the anti-fraud provisions, depending on the facts and circumstances of the situation. Additionally, as part of the Dodd-Frank Act, Section 15B of the Exchange Act was amended to prohibit municipal advisors from engaging in fraudulent, deceptive, or manipulative conduct when engaging in municipal advisory activities.

Advisor-specific provisions. Section 15B of the Exchange Act prohibits any fraudulent, deceptive, or manipulative act or practice by a municipal advisor while engaging in municipal advisory activities on behalf of a municipal entity or obligated person. This provision of Section 15B of the Exchange Act applies in addition to certain other anti-fraud provisions.

As a result, depending upon the facts and circumstances, actions taken or not taken by a municipal advisor while participating in the preparation of disclosure documents may constitute a violation of this provision. The staff notes that the prohibitions in Section 15B of the Exchange Act are not limited to acts or practices aimed at investors and are not limited to activities related to the purchase, offer, and sale of securities.

The Commission said it brought several enforcement actions against municipal advisors under this anti-fraud provision (Section 15B(a)(5) of the Exchange Act), but none involved preparation of disclosure documents.

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