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Why Did the SEC Conclude Tax-Exempt Borrowers Needed Protection?

The professionals at Hamlin Capital Advisors have the “municipal advisor” designation—this is a new class of regulated individuals authorized to advise municipal and nonprofit borrowers.

Previously, underwriters and banks were permitted to communicate directly with municipal and nonprofit borrowers, and even provide recommendations about municipal financial products or the issuance of municipal securities, specific to a borrower’s objectives or circumstances.

Now, underwriters and banks are limited to communicating information about general market conditions, facts and ideas. They are not permitted to advise and recommend a plan of finance, unless certain exemptions apply, because underwriters have an inherent conflict of interest to generate a fee-paying transaction—and therefore cannot legitimately portray themselves as unbiased.

One of these exemptions is if a municipal and nonprofit borrower has already retained an independent registered municipal advisor—such as Hamlin Capital Advisors—and informed the underwriter of the relationship.

Simply put, your underwriter can no longer simultaneously act as your financial advisor and underwriter. As a Municipal Advisor, however, Hamlin Capital Advisors can represent your interests as you negotiate with underwriters and banks.

To discuss your individual needs, please call us at 813-280-1000, or contact us.