Federal Register: July 11, 2005 (Volume 70, Number 131)
DOCID: FR Doc E5-3616
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-51952; File No. SR-MSRB-2005-10]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Regarding Technical Amendment to Rule G-37, on Political Contributions and Prohibitions on Municipal Securities Business
DOCUMENT SUMMARY:
June 30, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on June 2, 2005, the Municipal Securities Rulemaking Board (``MSRB'' or
``Board''), filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the MSRB.
The MSRB has filed the proposal as a ``noncontroversial'' rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b
4(f)(6) thereunder,\4\ which renders the proposal effective upon filing
with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons. \1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b4(f)(6).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The MSRB is filing with the Commission a proposed rule change
consisting of a technical amendment to Rule G37, on political
contributions and prohibitions on municipal securities business. The
MSRB has set an effective date for the proposed rule change of July 5,
2005. The text of the proposed rule change is available on the MSRB's
Web site (http://www.msrb.org), at the MSRB's principal office, and at [[Page 39837]]
the Commission's Public Reference Room.
II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule G37, on political contributions and prohibitions on municipal securities business, provides that contributions to officials of an issuer by a municipal finance professional (``MFP'') of a dealer can result in the dealer being banned from municipal securities business with such issuer for a period of two years. When a person first becomes an MFP, the rule imposes a ``look back'' in which certain contributions made by such person prior to becoming an MFP (in addition to contributions made after becoming an MFP) can result in the imposition of the ban. The nature of such look back varies depending on the type of MFP. In the case of persons who become MFPs solely as a result of their supervisory activities or firm leadership positions within the meaning of clause (C), (D) or (E) of Rule G37(g)(iv) (``supervisor MFPs''), the look back period established in Rule G37(b)(iii) is limited to the six month period prior to becoming an MFP.
The MSRB has learned that some people may read the language in Rule G37(b)(iii) literally to provide that the only contributions of supervisor MFPs that can result in a ban on business are those made during the six month look back period, and that contributions made after becoming such an MFP are excluded. This interpretation clearly was not the intent of this provision. The proposed rule change would clarify this language to ensure that those contributions made after becoming an MFP are also subject to the potential ban.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act,\5\ which provides that MSRB rules shall:
\5\ 15 U.S.C. 78o4(b)(2)(C).
Be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities, to remove
impediments to and perfect the mechanism of a free and open market
in municipal securities, and, in general, to protect investors and the public interest * * *
The MSRB believes that the proposed rule change clarifies the rule's
intent of ensuring that the high standards and integrity of the municipal securities industry are maintained.
B. SelfRegulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change will result
in any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
C. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days from June 2, 2005, the date on which it was
filed, and the MSRB provided the Commission with written notice of its
intent to file the proposed rule change at least five business days
prior to the filing date, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b4(f)(6) thereunder.\7\
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b4(f)(6).
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.\8\
\8\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of the following methods:
Electronic Comments
Paper Comments
All submissions should refer to File Number SRMSRB200510. This
file number should be included on the subject line if email is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the MSRB. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SRMSRB200510 and should be submitted on or before August 1, 2005.
[[Page 39838]]
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\9\
Jill M. Peterson,
Assistant Secretary.
\9\ 17 CFR 200.303(a)(12).
[FR Doc. E53616 Filed 7805; 8:45 am]
BILLING CODE 801001P
SUMMARY:
Municipal Securities Rulemaking Board,
DOCUMENT BODY 2:
June 30, 2005.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on June 2, 2005, the Municipal Securities Rulemaking Board (``MSRB'' or
``Board''), filed with the Securities and Exchange Commission
(``Commission'' or ``SEC'') the proposed rule change as described in
Items I, II and III below, which Items have been prepared by the MSRB.
The MSRB has filed the proposal as a ``noncontroversial'' rule change
pursuant to Section 19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b
4(f)(6) thereunder,\4\ which renders the proposal effective upon filing
with the Commission. The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons. \1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A)(iii).
\4\ 17 CFR 240.19b4(f)(6).
I. SelfRegulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change
The MSRB is filing with the Commission a proposed rule change
consisting of a technical amendment to Rule G37, on political
contributions and prohibitions on municipal securities business. The
MSRB has set an effective date for the proposed rule change of July 5,
2005. The text of the proposed rule change is available on the MSRB's
Web site (http://www.msrb.org), at the MSRB's principal office, and at [[Page 39837]]
the Commission's Public Reference Room.
II. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Rule G37, on political contributions and prohibitions on municipal securities business, provides that contributions to officials of an issuer by a municipal finance professional (``MFP'') of a dealer can result in the dealer being banned from municipal securities business with such issuer for a period of two years. When a person first becomes an MFP, the rule imposes a ``look back'' in which certain contributions made by such person prior to becoming an MFP (in addition to contributions made after becoming an MFP) can result in the imposition of the ban. The nature of such look back varies depending on the type of MFP. In the case of persons who become MFPs solely as a result of their supervisory activities or firm leadership positions within the meaning of clause (C), (D) or (E) of Rule G37(g)(iv) (``supervisor MFPs''), the look back period established in Rule G37(b)(iii) is limited to the six month period prior to becoming an MFP.
The MSRB has learned that some people may read the language in Rule G37(b)(iii) literally to provide that the only contributions of supervisor MFPs that can result in a ban on business are those made during the six month look back period, and that contributions made after becoming such an MFP are excluded. This interpretation clearly was not the intent of this provision. The proposed rule change would clarify this language to ensure that those contributions made after becoming an MFP are also subject to the potential ban.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act,\5\ which provides that MSRB rules shall:
\5\ 15 U.S.C. 78o4(b)(2)(C).
Be designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect
to, and facilitating transactions in municipal securities, to remove
impediments to and perfect the mechanism of a free and open market
in municipal securities, and, in general, to protect investors and the public interest * * *
The MSRB believes that the proposed rule change clarifies the rule's
intent of ensuring that the high standards and integrity of the municipal securities industry are maintained.
B. SelfRegulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change will result
in any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.
C. SelfRegulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received on the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action
Because the proposed rule change: (i) Does not significantly affect
the protection of investors or the public interest; (ii) does not
impose any significant burden on competition; and (iii) does not become
operative for 30 days from June 2, 2005, the date on which it was
filed, and the MSRB provided the Commission with written notice of its
intent to file the proposed rule change at least five business days
prior to the filing date, the proposed rule change has become effective
pursuant to Section 19(b)(3)(A) of the Act \6\ and Rule 19b4(f)(6) thereunder.\7\
\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b4(f)(6).
At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.\8\
\8\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C). IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of the following methods:
Electronic Comments
Paper Comments
All submissions should refer to File Number SRMSRB200510. This
file number should be included on the subject line if email is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the MSRB. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SRMSRB200510 and should be submitted on or before August 1, 2005.
[[Page 39838]]
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\9\
Jill M. Peterson,
Assistant Secretary.
\9\ 17 CFR 200.303(a)(12).
[FR Doc. E53616 Filed 7805; 8:45 am]
BILLING CODE 801001P