Board Members Beware - SEC Regulatory Authority May Cast Wide Net

Governmental board members and board members of nonprofit organizations may be "in the sights" of the Securities and Exchange Commission (SEC) if their organizations are involved in the issuance of municipal bonds, including tax-exempt bonds. Federal statutes known as the Dodd-Frank Wall Street Reform and Consumer Protection Act recently adopted by Congress (the Act) amended the Securities Exchange Act of 1934 (the 34 Act) to add a new requirement that "municipal advisors" register with the SEC. The definition of municipal advisor, as interpreted by the SEC, is potentially quite broad and could include appointed members of the governing body of an issuer of municipal bonds or the entity borrowing the proceeds thereof. For example, the Act could apply to the board members of a local industrial development authority or a private college.