States and local governments issue municipal securities each year to raise funds for various public projects, including those pertaining to hospitals. Municipalities frequently rely on advisers to issue these securities, including municipal bonds. The advisers help decide how and when to issue the securities and how to invest the proceeds from the sales, among other duties. In turn, these advisers are paid for their services.
Municipal advisers were not required to register with the SEC before the 2010 Dodd‑Frank Act and were not subject to a comprehensive regulatory review. “Therefore, municipal advisers did not have to adhere to standards for training, qualification or conduct, including the treatment of conflicts of interest,” according to the SEC. This rule will remedy that. Municipal advisers will now be required to register with the SEC and comply with a set of regulations that would be issued by the Municipal Securities Rulemaking Board.
The final rule excludes governing board members and hospital employees as municipal advisers — an exclusion the American Hospital Association had recommended. The final rule includes other exemptions, including attorneys who provide traditional legal services (i.e. not primarily financial services) and other advisory sources.
The rule will take effect within 60 days of its publication in the Federal Register.
More Articles on Final Rules Affecting Hospitals:
New-Era Executive Compensation: The Impacts of Dodd-Frank’s “Say-on-Pay” for Hospitals
Executive Compensation: 9 Things Every Hospital CEO Should Know
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