After months of discussion and comment, the U.S. Securities and Exchange Commission (SEC) issued a Temporary Exemptive Order on June 16, 2020, that allows municipal advisors to provide services, which have historically been limited to broker-dealers, under certain circumstances and for a limited time. Municipal advisors have been, and continue to be, allowed to assist issuers with negotiating terms of direct placement and bank loan transactions. The temporary order allows for additional assistance by permitting solicitation under very specific guidelines.
Municipal advisors may solicit banks, wholly-owned subsidiaries of banks or credit unions. The transaction cannot exceed $20 million and must be sold and closed by Dec. 31, 2020. There are also a number of requirements specific to this type of transaction needed to document the usage of the temporary order for a specific transaction. None of the requirements are burdensome; they just provide documentation and clarity to all the parties involved.
The municipal advisor must disclose the following to the purchaser/qualified provider:
Following this disclosure by the municipal advisor, the qualified provider must provide written acknowledgement of the above terms.
The qualified provider also has a responsibility to provide a certificate that represents the following:
A final unique disclosure is required to provide information to the SEC, including:
For more information on this topic, or to learn how Baker Tilly Municipal Advisors can help determine whether this temporary order may be an option for a project in your community, school, library or utility, contact Brian Colton.