3.1. A Quick History of Municipal Securities Regulation

Both the Securities Act of 1933 and the Securities Exchange Act of 1934 exempt municipal securities from the registration and reporting requirements of the SEC. That changed in the 1970s when the market for municipal securities expanded and the New York City fiscal crisis spurred the federal government to enact the Securities Acts Amendments of 1975. In these amendments, Congress provided a regulatory framework for the municipal securities industry. For the exam, you will need to remember five critical points from the 1975 amendments:

1. Broker-dealers transacting in municipal securities business must register with the SEC. Firms that conduct business in municipal securities need to register with the SEC as broker-dealers. Banks that deal in municipal securities are also required to register as municipal securities dealers.

2. Transactions in municipal securities are not exempt from anti-fraud regulations. While municipal securities are exempt from registration, they are not exempt from anti-fraud regulations. In fact, under the Securities Acts Amendments of 1975, all anti-fraud regulations that apply to regist