SEC Staff Views on Municipal Advisors and Disclosure Documents
SEC Staff Views on Municipal Advisor Disclosure Responsibilities
On September 16, 2026, the staff of the Office of Municipal Securities at the Securities and Exchange Commission published its views on what obligations a municipal advisor — specifically a non-solicitor municipal advisor — incurs under the Securities Act of 1933 and the Securities Exchange Act of 1934 as a function of the role it plays, if any, in preparing a municipal entity's or obligated person's primary and secondary market disclosure documents.
Note: The statement opens with the customary disclaimer that it reflects staff views rather than those of the Commission, has no legal force or effect, and neither amends existing law nor creates new obligations.
Its analytic foundation is a two-part test: participation in preparing disclosure documents amounts to municipal advisory activity when that participation falls within the scope of the advisor's relationship with its client and when it otherwise constitutes "advice," which the Commission has defined as a recommendation particularized to the specific needs, objectives, or circumstances of the client concerning municipal financial products or the issuance of municipal securities, including structure, timing, and terms. Because preliminary and final official statements customarily describe precisely those matters, drafting or editing them is frequently the vehicle through which such advice is conveyed. The statement catalogs the range of possible involvement — primary drafting responsibility, drafting specified portions, reviewing or editing the whole document or part of it, performing administrative or clerical tasks, or declining to participate entirely — and notes that purely clerical or ministerial work is not municipal advisory activity. It acknowledges the market practice, reflected in the Securities Industry and Financial Markets Association's model engagement letter, of an advisor agreeing to assemble a document from materials supplied by the working group without independently confirming the underlying information, and observes that such assembly may not involve advice. The staff cautions, however, that compilation tends to shade into advice in practice, because someone must reconcile defined terms, ensure internal consistency among numbers and text, and decide which data to include and which comments to accept or reject — and where the assembling advisor makes those judgments about structure, timing, or terms, an advisory component becomes more likely.
The second body of the statement addresses liability, and the staff is emphatic that the federal antifraud provisions reach a municipal advisor's involvement with a disclosure document even where advice on disclosure preparation is expressly excluded from the written engagement. Municipal advisors, like everyone else, are subject to Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act together with Rule 10b-5, and may be primarily or secondarily liable depending on the facts. Critically, while Section 17(a)(1), Section 10(b), and Rule 10b-5 require scienter — a mental state embracing intent to deceive, manipulate, or defraud, satisfiable by recklessness — Sections 17(a)(2) and 17(a)(3) require only negligence. The statement illustrates through enforcement precedent involving advisors who, before the Dodd-Frank Wall Street Reform and Consumer Protection Act, performed functions comparable to today's municipal advisors. In one litigated matter, an advisor who had contractually bound herself to prepare an official statement in accordance with the disclosure required by Rule 15c2-12 was found to have undertaken not merely procedural obligations but substantive responsibility for the accuracy and completeness of the representations, making her more than a mere compiler of data. In a settled matter, an advisor that described itself as a financial and marketing specialist nonetheless recommended disclosure language, observed other professionals alter it in ways that omitted material information about the sources of repayment, raised no objection, and was found primarily liable under Sections 17(a)(2) and 17(a)(3) because it had received or had access to the omitted information. Secondary liability is equally available: an advisor may be held liable for causing a violation where it knew or should have known its act or omission would contribute to that violation, or for aiding and abetting where there is a primary violation, knowledge or recklessness as to it, and substantial assistance. Layered atop all of this is Section 15B(a)(5) of the Securities Exchange Act, the provision specific to municipal advisors, which prohibits any fraudulent, deceptive, or manipulative act or practice while engaging in municipal advisory activities and which, the staff notes, is not confined to conduct directed at investors nor to activity connected with the purchase, offer, or sale of securities — though no enforcement action under it has yet involved the preparation of disclosure documents. Liability disclaimers appearing in official statements cannot waive antifraud liability, although an administrative law judge has treated such language as evidence bearing on what the engagement's scope actually was.
The third theme concerns how the scope of the advisory relationship is established and what that means for the statutory fiduciary duty owed to municipal entities under Section 15B(c)(1) of the Securities Exchange Act, and for the duty of care and duty of fair dealing owed to obligated persons under Municipal Securities Rulemaking Board Rules G-42 and G-17 — an obligated person being owed no statutory fiduciary duty under the Securities Exchange Act, a distinction the statement preserves carefully. Scope is fixed either by agreement or by the activities actually undertaken, and the staff makes clear that conduct can override the paper: an advisor that disclaims disclosure responsibilities in writing and subsequently drafts the document has, in the staff's view, redefined both the scope of its services and the breadth of its fiduciary duty. Routine participation across consecutive transactions may create an expectation among the client and other parties that the participation will continue; delivering a written description of services without obtaining a countersigned agreement, then orally agreeing to additional work, may establish a course of dealing at odds with the written description. Such ambiguity, the staff warns, increases the likelihood of false or materially misleading statements precisely because no one clearly owns verification, and other transaction participants may assume the advisor bears responsibility it has not accepted. On duration, the staff's view is that the fiduciary duty generally persists for the longer of the agreement's term or the period during which municipal advisory activity continues. The type of sale also matters: in a negotiated offering, an administrative law judge permitted an advisor drafting a disclosure document to rely on the underwriter's due diligence as to material issues, whereas in a competitive offering — where no underwriter is in place when the preliminary document is prepared — an advisor taking a primary disclosure role may bear a heightened obligation to inquire into the completeness and accuracy of the disclosure. The staff closes with concrete measures: engagement letters specifying which documents or portions of documents are the advisor's responsibility and in what capacity it serves, whether as provider, drafter, reviewer, editor, or assembler of specified data, or alternatively stating expressly that the advisor will not participate; prompt amendment of that documentation whenever the role changes during a transaction, as Rule G-42 requires, and periodic review of longstanding agreements to confirm they still reflect the parties' understanding; an appropriate level of inquiry into accuracy and completeness where a disclosure role exists; and written policies and procedures under Rule G-44 reasonably designed to achieve compliance with the applicable securities laws.
Ref: Statement on Non-Solicitor Municipal Advisors’ Role in Disclosure
Office of Municipal Securities
Sept. 16, 2026
