Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Proposed Rule Change Relating to Solicitation of Municipal Securities Business Under MSRB Rule G-38, 20782-20787 [E5-1879]
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Federal Register / Vol. 70, No. 76 / Thursday, April 21, 2005 / Notices
member. Under current practice, GSD
issues its clearing fund deficiency
notices by telephone calls typically at
8:30 a.m. eastern time, and by a
facsimile containing (i) a cover letter
summarizing the deficiency status and
(ii) a detailed report reflecting the firm’s
current clearing fund requirement and
collateral on deposit. Therefore,
deficiency calls typically must be
satisfied by approximately 10:30 a.m.
eastern time.
Notwithstanding GSD’s issuance of
clearing fund calls, each member has
the ability to access a report each day
detailing its clearing fund balances and
any deficiency thereof generally by
12:30 a.m. eastern time.
To further ensure the timely
satisfaction of clearing fund deficiency
calls and taking into account members’
ready access to clearing fund deficiency
information, the proposed rule change
would establish a firm deadline of 10:30
a.m. eastern time for such satisfaction
and eliminate current provisions which
correlate the timing of the deadline to
the issuance of the notice by FICC.3 As
a result, it would be incumbent upon
members to access directly the
appropriate report detailing their
clearing fund deposit requirements so
they might satisfy any deficiencies.
FICC believes the proposed rule
change is consistent with the
requirements of section 17A of the Act 4
and the rules and regulations
thereunder applicable to FICC because it
promotes timely satisfaction of clearing
fund deficiency calls and reduces the
amount of risk to FICC and its members.
As such, FICC believes the proposed
rule assures the safeguarding of
securities and funds that are in the
custody and control of FICC or for
which it is responsible.
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
FICC does not believe that the
proposed rule change will have any
impact or impose any burden on
competition.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments relating to the
proposed rule change have not yet been
solicited or received. FICC will notify
the Commission of any written
comments received by FICC.
3 Under the proposed rule, FICC may extend this
deadline if operational or systems difficulties arise
that reasonably prevent members from satisfying
the 10:30 a.m. eastern time deadline.
4 15 U.S.C. 78q–1.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within thirty-five days of the date of
publication of this notice in the Federal
Register or within such longer period:
(i) As the Commission may designate up
to ninety days of such date if it finds
such longer period to be appropriate
and publishes its reasons for so finding;
or (ii) as to which the self-regulatory
organization consents, the Commission
will:
(A) By order approve such proposed
rule change or
(B) Institute proceedings to determine
whether the proposed rule change
should be disapproved.
inspection and copying at the principal
office of FICC and on FICC’s Web site
at https://www.ficc.com. 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 SR–FICC–
2005–07 and should be submitted on or
before May 12, 2005.
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:
BILLING CODE 8010–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml) or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–FICC–2005–07 on the
subject line.
For the Commission by the Division of
Market Regulation, pursuant to delegated
authority.5
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–1877 Filed 4–20–05; 8:45 am]
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51561; File No. SR–MSRB–
2005–04]
Self-Regulatory Organizations;
Municipal Securities Rulemaking
Board; Notice of Filing of Proposed
Rule Change Relating to Solicitation of
Municipal Securities Business Under
MSRB Rule G–38
April 15, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
Paper Comments
notice is hereby given that on March 22,
• Send paper comments in triplicate
2005, the Municipal Securities
to Jonathan G. Katz, Secretary,
Rulemaking Board (‘‘MSRB’’ or
Securities and Exchange Commission,
‘‘Board’’) filed with the Securities and
450 Fifth Street, NW., Washington, DC
Exchange Commission (‘‘SEC’’ or
20549–0609.
‘‘Commission’’) the proposed rule
All submissions should refer to File
change as described in items I, II and III
Number SR–FICC–2005–07. This file
below, which Items have been prepared
number should be included on the
by the MSRB. The Commission is
subject line if e-mail is used. To help the
publishing this notice to solicit
Commission process and review your
comments on the proposed rule change
comments more efficiently, please use
from interested persons.
only one method. The Commission will
post all comments on the Commission’s I. Self-Regulatory Organization’s
Statement of The Terms of Substance of
Internet Web site (https://www.sec.gov/
the Proposed Rule Change
rules/sro.shtml). Copies of the
submission, all subsequent
The MSRB has filed with the
amendments, all written statements
Commission a proposed rule change
with respect to the proposed rule
deleting existing Rule G–38, on
change that are filed with the
consultants, and replacing it with new
Commission, and all written
Rule G–38, on solicitation of municipal
communications relating to the
securities business. In addition, the
proposed rule change between the
proposed rule change would make
Commission and any person, other than related amendments to Rule G–37, on
those that may be withheld from the
political contributions and prohibitions
public in accordance with the
on municipal securities business, Rule
provisions of 5 U.S.C. 552, will be
G–8, on recordkeeping, Form G–37/G–
available for inspection and copying in
38 and Form G–37x, as well as add new
the Commission’s Public Reference
Section, 450 Fifth Street, NW.,
5 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
Washington, DC 20549. Copies of such
2 17 CFR 240.19b–4.
filings also will be available for
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Federal Register / Vol. 70, No. 76 / Thursday, April 21, 2005 / Notices
Form G–38t. The text of the proposed
rule change, as well as proposed
amended Form G–37, amended Form G–
37x and new Form G–38t, are available
on the MSRB’s Web site (https://
www.msrb.org), at the MSRB’s principal
office, and at the Commission’s Public
Reference Room.
II. Self-Regulatory 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. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The MSRB began its current
rulemaking initiative on the solicitation
on behalf of brokers, dealers and
municipal securities dealers (‘‘dealers’’)
of municipal securities business3 by
consultants4 early last year because of
certain practices that could present
challenges to maintaining the integrity
of the municipal securities market.5
These practices include, among other
things, significant increases in recent
years in the number of consultants being
used, the amount these consultants are
being paid and the level of reported
political giving by consultants. The
MSRB has been concerned that
increases in levels of compensation paid
to consultants for successfully obtaining
municipal securities business may be
motivating consultants, who currently
are not subject to the basic standards of
fair practice and professionalism
3 Municipal securities business is defined in Rule
G–37 as the purchase of a primary offering from the
issuer on other than a competitive bid basis (e.g.,
negotiated underwriting), the offer or sale of a
primary offering on behalf of an issuer (e.g., private
placement or offering of municipal fund securities),
and the provision of financial advisory, consultant
or remarketing agent services to an issuer for a
primary offering in which the dealer was chosen on
other than a competitive bid basis.
4 Current Rule G–38 defines consultant as any
person used by a dealer to obtain or retain
municipal securities business through direct or
indirect communication with an issuer on behalf of
the dealer where such communication is
undertaken in exchange for payment from the
dealer or any other person.
5 See footnotes 14 and 15 infra and accompanying
text.
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embodied in MSRB rules, to use more
aggressive or questionable tactics in
their contacts with issuers. In addition,
the MSRB has expressed concern over
whether dealers are uniformly making
the required disclosures to issuers and
on Form G–37/G–38, and whether they
are undertaking the other required
duties imposed by Rule G–38, for all
persons who by their actions should be
considered consultants. The MSRB
believes that it would be appropriate to
apply the basic standards of fair practice
and professionalism embodied in MSRB
rules to all persons who solicit
municipal securities business on behalf
of dealers. The application of such
standards would ensure that all
solicitations are undertaken in
accordance with the ethical standards
that govern dealer personnel.
Thus, the MSRB has determined to
file the proposed rule change with the
Commission.
Summary of Proposed Amendments to
Rule G–38
Prohibited Payments. Existing Rule
G–38, on consultants, is replaced in its
entirety by new Rule G–38, on
solicitation of municipal securities
business. The new rule prohibits dealers
from making any direct or indirect
payment to any person who is not an
affiliated person of the dealer for a
solicitation of municipal securities
business on behalf of the dealer.
Definitions of Affiliated Person and
Affiliated Company. An affiliated
person of a dealer is defined as any
partner, director, officer or employee of
the dealer or of an affiliated company.
An affiliated company of a dealer is an
entity that controls, is controlled by or
is under common control with the
dealer and whose activities are not
limited solely to the solicitation of
municipal securities business. Thus, a
dealer affiliate whose activities consist
only of soliciting municipal securities
business and that undertakes no other
bona fide activities with respect to the
dealer or with respect to any other
affiliated company of the dealer does
not qualify as an affiliated company for
purposes of new Rule G–38.6
Definition of Solicitation. Solicitation
is defined as a direct or indirect
communication with an issuer for the
6 This provision is not intended to exclude from
the definition of affiliated company any entity that
is a legitimate member of a dealer’s corporate
family, so long as such entity’s sole bona fide
purpose is not to solicit municipal securities
business for the dealer or for any of the dealer’s
other affiliated companies. In the case of a dealer
organized as a separately identifiable department or
division of a bank (‘‘SID’’) under Rule G–1, those
portions of the bank outside of the SID would be
treated as an affiliated company of the dealer.
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purpose of obtaining or retaining
municipal securities business.
Transitional Payments and New Form
G–38t. Notwithstanding the foregoing,
dealers are permitted to make payments
to non-affiliated persons for solicitations
of municipal securities business if such
payments are made with respect solely
to solicitation activities undertaken by
such persons on or prior to the date of
Commission approval of the
amendments. Such payments are
permitted only if (A) the dealer had
been selected by the issuer on or prior
to the approval date of the proposed
amendments to engage in such
municipal securities business; 7 (B) the
consultant has not solicited municipal
securities business from any issuer on
behalf of the dealer at any time after the
approval date; and (C) the dealer
submits to the MSRB, by the last day of
the month following the end of each
calendar quarter during which
payments to the consultant are made or
remain pending, new Form G–38t.8 The
dealer must provide on Form G–38t the
same types of disclosures currently
required to be made with respect to
consultants under existing Rule G–38.9
The MSRB will make public copies of
all Forms G–38t it receives on its Web
site at https://www.msrb.org. The use of
Form G–37/G–38 will be discontinued
on the date of Commission approval of
the amendments. All information
submitted to the MSRB with respect to
consultants on or after the date of
Commission approval must be
submitted on Form G–38t rather than
old Form G–37/G–38, even if a payment
required to be reported to the MSRB has
7 A dealer must be able to provide documentation
from the issuer or other third party of its selection
on or prior to the Commission approval date for the
amendments.
8 Since it is expected that Form G–38t will be
used during only a short period of time, as
discussed below, the MSRB has elected not to
develop an electronic submission system for such
form. Thus, dealers submitting Forms G–38t to the
MSRB must send two copies of the form to the
MSRB by certified or registered mail, or some other
equally prompt means that provides a record of
sending.
9 These disclosures include the name, business
address and role of the consultant, the
compensation arrangement, any municipal
securities business obtained or retained by the
consultant for which payment is made or is pending
and dollar amounts paid to the consultant in such
quarter for each such item of business, the total
dollar amount paid to each consultant in such
calendar quarter, and the reportable political
contributions and reportable political party
payments of the consultant. Each item of municipal
securities business for which payment remains
pending must be listed on the quarterly reports
until such quarter in which payment is finally
made, at which time the amount paid must be
listed. If no further payments are to be made to a
consultant, such consultant need not be listed on
Form G–38t for subsequent quarters.
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Federal Register / Vol. 70, No. 76 / Thursday, April 21, 2005 / Notices
been made to the consultant prior to
such date of approval.
The MSRB expects that dealers will
terminate their contractual obligations
with and remit final payments to
consultants promptly following
approval of the amendments by the
Commission. The MSRB will ask the
applicable enforcement agencies to
review Forms G–38t and the
circumstances of continuing payments
to consultants in order to ensure that
such payments are not being made in an
attempt to circumvent the intent of the
new rule provisions.
Summary of Proposed Amendments to
Rule G–37 and Forms G–37/G–38 and
G–37x
Rule G–37 is amended to (i) delete
references and provisions relating to
consultant information provided under
Rule G–38, (ii) reflect that those
associated persons who solicit
municipal securities business and
thereby are municipal finance
professionals include affiliated persons
under Rule G–38, (iii) add a reference to
the definition of solicitation under new
Rule G–38, (iv) reflect the renaming of
Form G–37/G–38 as Form G–37, and (v)
make section headings consistent
throughout the rule. Form G–37/G–38 is
renamed as Form G–37, and Section IV
and the consultant attachment to the
form are deleted.10 In addition, Form G–
37x is amended to delete references to
the reporting of consultant information.
Summary of Proposed Amendments to
Rule G–8
Rule G–8, on recordkeeping, is
amended to require dealers to retain
copies of any submitted Forms G–38t
and records of their submission to the
MSRB, as well as to reflect the historical
nature of the records that dealers must
retain with respect to the deleted
consultant provisions of existing Rule
G–38.
2. Statutory Basis
The MSRB believes that the proposed
rule change is consistent with section
15B(b)(2)(C) of the Act,11 which
provides that the MSRB’s rules shall ‘‘be
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
10 The form also is amended to reflect the
previous renaming of ‘‘executive officers’’ as ‘‘nonMFP executive officers’’ under Rule G–37 and to
rename the municipal securities business category
designation of ‘‘private placement’’ to ‘‘agency
offering’’ to more accurately reflect the nature of
this category. The substance of Section IV and the
consultant attachment deleted from the form have
been included in new Form G–38t.
11 15 U.S.C. 78o–4(b)(2)(C).
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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 * * *.’’ 12
The MSRB believes that the proposed
rule change is consistent with the Act
because it will further investor
protection and the public interest by
ensuring that solicitations of municipal
securities business are undertaken in a
manner consistent with standards of fair
practice and professionalism, thereby
helping to maintain public trust and
confidence in the integrity of the
municipal securities market.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The MSRB does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act since it would apply
equally to all dealers.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The MSRB published notices for
comment on draft amendments to Rule
G–38 on April 5, 2004 (the ‘‘April 2004
Notice’’) 13 and September 29, 2004 (the
‘‘September 2004 Notice’’).14 The April
2004 notice sought comments on draft
amendments limiting payments by a
dealer for the solicitation of municipal
securities business on its behalf solely
to its associated persons (the ‘‘original
draft amendments’’). The MSRB
received comments from 28
commentators.15
12 Id.
MSRB Notice 2004–11 (April 5, 2004).
MSRB Notice 2004–32 (September 29,
2004), as modified by MSRB Notice 2004–33
(October 12, 2004).
15 Letters from Sam Conner, Senior Vice President
and Manager of Public Finance, J.J.B. Hilliard, W.L.
Lyons, Inc. (‘‘JJB Hilliard’’), to Kit Taylor, Executive
Director, MSRB, dated April 14, 2004; Jerry L.
Chapman (‘‘Mr. Chapman’’), to Ernesto A. Lanza,
Senior Associate General Counsel, MSRB, dated
April 22, 2004; Joe Jolly, Jr., Joe Jolly & Co., Inc.
(‘‘Joe Jolly’’), to William J. Jester, Jr., Chairman,
MSRB, dated April 26, 2004; Peter J. Hill, Managing
Director, Public Finance Department, JP Morgan
(‘‘JP Morgan’’), to Mr. Taylor dated April 26, 2004;
R. Steven Crowley, President, Nevis Securities, LLC
(‘‘Nevis’’), to Mr. Lanza dated April 29, 2004;
Dennis G. Ciocca, Senior Managing Director, Sutter
Securities Incorporated (‘‘Sutter’’) to Mr. Taylor,
dated May 17, 2004; Maud Daudon, Managing
Director, Investment Banking, and John Rose,
President & CEO, Seattle-Northwest Securities
Corporation (‘‘Seattle-Northwest’’) to Mr. Taylor,
dated May 19, 2004; Gordon Reis III, Managing
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13 See
14 See
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The September 2004 notice sought
comments on revised draft amendments
to Rule G–38 (the ‘‘revised draft
amendments’’) prohibiting a dealer from
making payments for the solicitation of
municipal securities business on its
behalf to any person who is not an
associated person of the dealer. The
revised draft amendments would have
imposed additional obligations on
dealers with respect to any solicitor who
is not a partner, director, officer or
employee. These obligations would
have included the entering into of a
contractual agreement, the subjecting of
such solicitors to MSRB rules (including
but not limited to Rule G–37) with
respect to their solicitation activities,
and the disclosure of arrangements
relating to such solicitors. The MSRB
received comments from 19
commentators.16
Principal, Seasongood & Mayer, LLC
(‘‘Seasongood’’) to Mr. Taylor, dated May 20, 2004;
Hill A. Feinberg, Chairman & Chief Executive
Officer, First Southwest Company (‘‘First
Southwest’’) to Mr. Lanza, dated May 26, 2004;
James C. Cervantes, Managing Director & Head of
the Public and Non-Profit Finance Group, and Scott
C. Sollers, Managing Director, Stone & Youngberg
(‘‘S&Y’’) to Mr. Lanza, dated June 2, 2004; Bruce
Moland, Vice President & Assistant General
Counsel, Wells Fargo & Company (‘‘Wells Fargo’’),
to Mr. Lanza dated June 2, 2004; Amelia A.J. Bond,
Director of Public Finance, A.G. Edwards & Sons,
Inc. (‘‘AG Edwards’’), to Mr. Lanza dated June 3,
2004; Pfilip G. Hunt, Jr., President, Gardnyr Michael
Capital, Inc. (‘‘Gardnyr Michael’’), to Mr. Taylor
dated June 3, 2004; G. Douglas Edwards, President
& CEO, Morgan Keegan & Company, Inc. (‘‘Morgan
Keegan’’), to Mr. Lanza dated June 3, 2004; Thomas
E. Lanctot, Principal and Head of the Public and
Non-Profit Finance Group, William Blair &
Company (‘‘William Blair’’), to Mr. Lanza dated
June 3, 2004; Sarah A. Miller, General Counsel,
ABA Securities Association (‘‘ABA’’), to Mr. Lanza
dated June 4, 2004; Daniel L. Keating, Senior
Managing Director, Bear Stearns & Co., Inc. (‘‘Bear
Stearns’’), to Mr. Lanza dated June 4, 2004; Lynette
Kelly Hotchkiss, Senior Vice President and
Associate General Counsel, Bond Market
Association (‘‘BMA’’), to Mr. Lanza dated June 4,
2004; Martin Cabrera, Jr., President, Cabrera Capital
Markets, Inc. (‘‘Cabrera’’), to Mr. Lanza dated June
4, 2004; Robyn A. Huffman, Vice President and
Associate General Counsel, Goldman Sachs & Co.
(‘‘Goldman’’), to Mr. Lanza dated June 4, 2004;
Samuel C. Doyle, Executive Vice President,
Kirkpatrick, Pettis, Smith, Polian Inc.
(‘‘Kirkpatrick’’), to Mr. Jester dated June 4, 2004;
Mike Dunn, Merchant Capital LLC (‘‘Merchant’’), to
the MSRB dated June 4, 2004; John J. Lawlor,
Managing Director, Municipal Markets, Merrill
Lynch (‘‘Merrill’’), to Mr. Lanza dated June 4, 2004;
Andrew Garvey, Managing Director, Morgan
Stanley & Co. Incorporated (‘‘Morgan Stanley’’), to
Mr. Lanza dated June 4, 2004; Bernard Beal, Chief
Executive Officer, M.R. Beal & Company (‘‘MR
Beal’’), to Mr. Lanza dated June 4, 2004; James S.
Keller, Chief Regulatory Counsel, PNC Capital
Markets, Inc. (‘‘PNC’’), to Mr. Lanza dated June 4,
2004; Terry L. Atkinson, Managing Director &
Director, Municipal Securities Group, UBS
Financial Services Inc., to Mr. Lanza dated June 4,
2004 (‘‘UBS’’); and Frank Y. Chin, Managing
Director, Public Finance Department, Municipal
Securities Division, Citigroup Global Markets, Inc.
(‘‘Citigroup’’), to Mr. Lanza dated June 7, 2004.
16 Letters from Mr. Ciocca (‘‘Mr. Ciocca’’) to Mr.
Lanza dated December 8, 2004; Mr. Hunt, Gardnyr
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Federal Register / Vol. 70, No. 76 / Thursday, April 21, 2005 / Notices
The comments received on the April
and September 2004 Notices are
discussed below.
Need for Regulatory Action on
Solicitation of Municipal Securities
Business
Comments Received. Many
commentators believe that consultants
are beneficial and allow dealers,
especially smaller regional dealers, to
maximize their limited resources and
compete with larger national dealers.17
Some of these commentators express
concern that the amendments would
negatively impact such dealers, with the
BMA stating that the proposal may
practically eliminate an entire segment
of the municipal securities industry.
The BMA and Sen. Santorum state that
the use of consultants increases
competition and provides issuers with
greater choice, thereby resulting in
‘‘better service at lower rates.’’ In
addition, they argue that consultants
that have a local presence ‘‘have unique
knowledge regarding the local issuer’s
needs and requirements,’’ thereby
improving the effectiveness of the dealer
at servicing the issuer. Merrill Lynch
notes that ‘‘the municipal marketplace
is uniquely fragmented, covering myriad
issuers in diverse locations.’’ It argues
that consultants are necessary to
providing quality service to such a
diverse market. UBS states that
disclosure of consultant practices is
better than a prohibition on using
consultants.
Michael, to Mr. Taylor dated December 10, 2004;
Ms. Daudon and Mr. Rose, Seattle-Northwest, to Mr.
Lanza dated December 13, 2004; Mr. Feinberg, First
Southwest, to Mr. Lanza dated December 14, 2004;
Mr. Moland, Wells Fargo, to Mr. Lanza dated
December 15, 2004; Robert A. Estrada, Chairman &
CEO, Estrada Hinojosa & Company, Inc. (‘‘Estrada’’),
to Mr. Lanza dated December 15, 2004; Ms.
Hotchkiss, BMA, to Mr. Lanza dated December 15,
2004; Ms. Huffman, Goldman, to Mr. Lanza dated
December 15, 2004; Mr. Garvey, Morgan Stanley, to
Mr. Lanza dated December 15, 2004; Mr. Atkinson,
UBS, to Mr. Lanza dated December 15, 2004; Glenn
Green, Vice President—Municipal Compliance,
Wachovia Securities (‘‘Wachovia’’), to Mr. Lanza
dated December 15, 2004; Mr. Lanctot, William
Blair, to Mr. Lanza dated December 15 and
December 16, 2004; Ronald J. Dieckman, Senior
Vice President & Director, Municipal Bond
Department, JJB Hilliard, to Mr. Lanza; Lawrence C.
Holtz, President, Fixed Income Group, RBC Dain
Rauscher (‘‘Dain Rauscher’’), to Mr. Lanza; Ms.
Miller, ABA, to Mr. Lanza dated December 17,
2004; Mr. Doyle, Kirkpatrick, to Mr. Taylor dated
December 17, 2004; Mr. Keating, Bear Stearns, to
Mr. Lanza dated December 20, 2004; Mr. Lawlor,
Merrill, to Mr. Lanza dated January 20, 2005; and
the Honorable Rick Santorum, United States Senate
(‘‘Sen. Santorum’’), to Mr. Lanza dated February 16,
2005.
17 See comments of Bear Stearns, BMA, Cabrera,
Citigroup, Gardnyr Michael, Goldman Sachs, JJB
Hilliard, Merrill Lynch, Morgan Stanley, MR Beal,
Nevis, PNC, Sen. Santorum, Sutter, UBS and
William Blair.
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Other commentators believe that there
is a significant problem with the use of
consultants that is appropriately
addressed by requiring that solicitation
activity be undertaken only by persons
subject to MSRB rules.18 JP Morgan
agrees ‘‘that eliminating the use of
consultants who are not associated
persons will advance the * * *
standards of fair practice and
professionalism embodied in the
Board’s rules and in the rules and
regulations that govern all activities of
brokers, dealers and municipal
securities dealers and their associated
persons.’’ It views the original draft
amendments as ‘‘a sensible regulatory
response to the increasing and evolving
use of third parties to solicit municipal
securities business.’’ Seattle-Northwest
states that ‘‘removing the opportunity
for improper conduct by consultants
would result overall in an improved
environment for issuance of municipal
securities.’’ Wells Fargo believes that
the original draft amendments have ‘‘the
benefit of removing the ability of a
dealer to indirectly evade the ‘pay to
play’ prohibitions * * * through the
use of consultants.’’
The BMA contends that the
amendments are not warranted, stating
that the MSRB relies on possible
abusive practices and speculative risks
that have not been shown to exist. It
questions whether there has been a
significant increase in contributions by
consultants and further states that,
‘‘regardless of the level of the
contributions being made, there is no
indication whatsoever that Consultant
contributions are being used to
influence decisions regarding municipal
securities business.’’ The BMA states
that coupling Rule G–37(d), on indirect
violations, with the existing disclosure
requirements of Rule G–38 provides an
effective means for addressing the
MSRB’s concerns.
With regard to compensation, the
BMA argues that the increase in
payments to consultants ‘‘does not in
any way indicate or imply that
Consultants are engaging in pay-to-play
or that there is added pressure on
Consultants to engage in aggressive or
abusive practices. Rather, the recent
increase in compensation appears to be
attributable to the significant increase in
the volume and size of municipal
securities deals.’’ On the other hand, AG
Edwards, Citigroup, Goldman, Merrill
and William Blair state that they would
support a prohibition on contingent
comments of ABA, Mr. Chapman, Mr.
Ciocca, Joe Jolly, JP Morgan, Kirkpatrick, Morgan
Keegan, Seasongood, Seattle-Northwest and Wells
Fargo.
PO 00000
18 See
Frm 00056
Fmt 4703
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20785
compensation arrangements or
‘‘success’’ fees paid to consultants.
However, S&Y opposes the imposition
of restrictions on the type and amount
of compensation paid to consultants.
MSRB Response. After a careful and
thorough review of industry comments
on the April and September 2004
Notices, the MSRB has concluded that
regulatory action in this area is
warranted, based on the concerns
previously expressed by the MSRB in
such notices and continuing revelations
of questionable activities involving
issuer personnel, dealers, other financial
services organizations, and third-party
intermediaries. Such activities have the
potential to severely undermine public
confidence in the municipal securities
market. The existing consultant
disclosure requirements under current
Rule G–38 have assisted the MSRB in
determining that action is necessary in
this area but cannot serve as a substitute
for such action. The MSRB believes that
the proposed rule change represents a
meaningful step toward further ensuring
the continued integrity of the municipal
securities market. The MSRB also
believes that the benefits to the
municipal securities market resulting
from the proposed rule change outweigh
the benefits that would accrue to
permitting consultants to continue
soliciting municipal securities business
on behalf of dealers. Furthermore, the
MSRB received comments both in favor
of and in opposition to the original draft
amendments from large national firms
and small or regional firms. Taken as a
whole, the comments do not provide
persuasive evidence that the proposed
rule change would have a disparate
effect on different types of dealers.
Other Unregulated Municipal Securities
Industry Participants
Comments Received. Many
commentators are concerned that,
although the problems associated with
pay-to-play in the municipal securities
industry are not limited to dealers, only
dealers are subject to regulation in this
area.19 First Southwest and Kirkpatrick
observe that any problem that may exist
requires a broader response than
restrictions applicable only to dealers.
Several commentators also believe that
current MSRB rules may permit dealers
with affiliated banks to use these banks
to circumvent MSRB rules.20 They urge
the MSRB to coordinate efforts with the
Commission, NASD and others to apply
pay-to-play limits to financial advisors,
19 See comments of Mr. Chapman, First
Southwest, Kirkpatrick, Merrill and Morgan
Keegan.
20 See comments of Goldman, Merchant, Morgan
Stanley and William Blair.
E:\FR\FM\21APN1.SGM
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Federal Register / Vol. 70, No. 76 / Thursday, April 21, 2005 / Notices
derivatives advisors, bond lawyers and
other market participants.
MSRB Response. The MSRB
recognizes that other participants in the
municipal securities industry face the
same types of challenges as does the
dealer community. Given the limited
jurisdictional reach of MSRB rules,
however, a more complete response to
concerns in this area requires voluntary
action on the part of the unregulated
parties in the municipal securities
market. The MSRB strongly encourages
other industry participants—including
but not limited to financial advisers,
lawyers and swap participants—to take
affirmative steps to ensure the integrity
of their portion of the marketplace and
toward severing the connection of
political contributions and other
payments that benefit public officials
and their surrogates from the awarding
of contracts relating to the municipal
securities, derivative products and other
financial activities of issuers. The MSRB
observes that the failure of such other
parties to take meaningful steps to deter
potential conflicts of interests and other
possibly abusive practices may merit
further consideration by the
Commission or Congress.
Apply Only G–37 to Consultants
Comments Received. Many
commentators suggest that the
applicability of MSRB rules to solicitors
be limited to Rule G–37 itself, or that
the MSRB draft new provisions having
varying degrees of similarity to those of
Rule G–37.22
MSRB Response. The MSRB disagrees
that only Rule G–37, and not the other
rules of the MSRB, should apply to the
activities of solicitors. As noted above,
one of the principal purposes of this
proposal was to make the process of
soliciting municipal securities business
subject to the standards of fair practice
and professionalism that apply to the
other municipal securities activities of
dealers. Imposition solely of Rule G–37
would fall short of this objective.
Comments Received. Many
commentators note that the associated
person concept used in the draft
amendments triggers requirements
under the Exchange Act and rules of
other self-regulatory organizations, and
can also raise state tax and labor law
issues.21 They argue that these nonMSRB requirements may be practically
impossible to apply to many solicitors.
Several commentators also state that
there is no guidance as to how solicitors
serving multiple dealers are to be
supervised.
MSRB Response. The MSRB
recognizes the concerns over the
associated person concept. The MSRB’s
intent in using the associated person
concept in the draft amendments was to
ensure that outside solicitors were fully
subject to MSRB rules and did not
extend to making other legal
requirements applicable to such
solicitors. The MSRB has therefore
abandoned the associated person
concept in the proposed rule change.
The MSRB believes that, as formulated,
the proposed rule change does not raise
the concerns expressed by these
commentators.
Suggested Alternative
Comments Received. The BMA
suggests that, as an alternative means of
subjecting consultants to fair practice
and professionalism standards, the
MSRB require that such standards be
embodied in a dealer’s agreement with
its consultant. It suggests that the
consultant agreement include
provisions that would impose by
contract the requirements of certain
MSRB rules, such as Rules G–17, G–20
and G–37, as well as assurances of
compliance with state and local ethics,
conflicts of interest, and lobbying
disclosures laws. The alternative
proposal would, however, limit the
application of Rule G–37 so as to
impose prohibitions on certain
contributions by consultants, rather
than imposing a ban on municipal
securities business on the dealer as a
result of such contributions. In addition,
failure by consultants to comply with
their contractual obligations would
result in termination of such contracts
and a prohibition on dealers engaging
consultants who have previously
violated their consultant contracts.
Dealers would not be subject to rule
violations as a result of a consultant’s
violation of its contractual obligation.
Bear Stearns, Dain Rauscher, Goldman,
JJB Hilliard, Merrill, Morgan Stanley,
UBS, and William Blair support this
approach, particularly with respect to
the more limited application of Rule G–
37 to contributions made by
consultants.
MSRB Response. Although the
suggested contractual alternative to the
revised draft amendments might
provide some incremental improvement
in the regulation of solicitation of
21 See comments of BMA, Gardnyr Michael,
Goldman, Morgan Stanley, PNC, UBS and William
Blair.
22 See comments of AG Edwards, BMA, Gardnyr
Michael, Goldman, Merrill, Morgan Stanley, S&Y
and William Blair.
Effect of Becoming an Associated Person
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14:55 Apr 20, 2005
Jkt 205001
PO 00000
Frm 00057
Fmt 4703
Sfmt 4703
municipal securities business over the
existing rule, the MSRB believes that its
concerns dictate that the MSRB take
significantly more decisive action that
ensures that dealers are fully
responsible for solicitation activities
undertaken for their benefit.
Definition of Solicitation
Comments Received. The BMA states
that the term solicitation should be
limited to ‘‘activity aimed at an issuer’’
out of concern that any communication
with a third party regarding a municipal
securities issue could potentially
become a solicitation of an issuer if the
third party passes such communication
on to the issuer. Many commentators are
concerned with specific scenarios where
they believe that certain types of
communications should not be
considered solicitations, particularly
where communications are directed at
conduit borrowers or where small
payments are made in exchange for a
communications.
MSRB Response. The MSRB
considered the comments related to the
definition of solicitation included in the
April 2004 Notice and provided more
specific guidance with respect to this
definition in the September 2004
Notice. Although such guidance in the
September 2004 Notice represents the
MSRB’s current view regarding this
definition, comments received on this
topic have been taken under advisement
for further consideration by the MSRB.
Constitutionality of Proposal
Comments Received. The BMA states
that the draft amendments would
violate the First Amendment of the U.S.
Constitution by requiring consultants to
become municipal finance professionals
(‘‘MFPs’’) under Rule G–37. The BMA
argues that the U.S. Supreme Court has
equated political contributions with
protected speech, and any restriction on
speech must be narrowly tailored to
advance a compelling governmental
interest. It further asserts that, assuming
for the sake of argument that pay-to-play
problems exist relating to consultants,
the draft amendments’ restrictions ‘‘far
exceed what would be necessary to
address that problem.’’
MSRB Response. In upholding the
constitutionality of Rule G–37 in Blount
v. SEC,23 the courts recognized that, at
its core, the rule was intended to sever
the connection between the making of
political contributions and the awarding
of municipal securities business. The
rule as then written (and as found
constitutional) applied to various
23 Blount v. SEC, 61 F. 3d 938 (D.C. Cir. 1995),
cert. denied, 116 S. Ct. 1351 (1996).
E:\FR\FM\21APN1.SGM
21APN1
Federal Register / Vol. 70, No. 76 / Thursday, April 21, 2005 / Notices
categories of persons associated with
dealers in addition to those who solicit
municipal securities business. For
example, the rule covers those persons
who underwrite or trade municipal
securities or who supervise such
activities. Given that the act of soliciting
municipal securities business more
closely touches on the core purpose of
Rule G–37 than do some of the other
municipal securities activities that are
undertaken by persons already treated
as MFPs and therefore demonstrates a
particularly close nexus between the
actions the MSRB seeks to regulate and
the purpose of its rulemaking, the MSRB
continues to firmly believe that the
argument that it is unconstitutional to
require a person who solicits municipal
securities business on behalf of a dealer
to be treated as an MFP subject to Rule
G–37 has no merit. The current
formulation of the proposed rule
change, which effectively prohibits paid
outside consultants rather than
requiring that such consultants become
MFPs subject to Rule G–37, further
negates this argument.
Effective Date
Comments Received. Several
commentators express concern about
existing contractual obligations if the
draft amendments were to be adopted
and urge the MSRB to make the effective
date apply prospectively so as not to
disrupt or dismantle existing
contracts.24
MSRB Response. The proposed rule
change prohibits dealers from making
any payments for solicitation activities
undertaken by non-affiliated persons
after the date of Commission approval of
the amendments. The provisions of the
proposed rule change permitting certain
transitional payments for solicitation
activities undertaken by consultants
prior to the approval of the amendments
should address the commentators’
concerns.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
A. By order approve such proposed
rule change; or
B. Institute proceedings to determine
whether the proposed rule change
should be disapproved.
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:
VerDate jul<14>2003
14:55 Apr 20, 2005
Jkt 205001
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–MSRB–2005–04 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File
Number SR-MSRB–2005–04. This file
number should be included on the
subject line if e-mail 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 (https://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 MSRB’s offices. 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 SR–MSRB–
2005–04 and should be submitted on or
before June 6, 2005.
PO 00000
Frm 00058
Fmt 4703
Sfmt 4703
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.25
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5–1879 Filed 4–20–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51559; File No. SR–NASD–
2005–024]
Electronic Comments
24 See comments of BMA, Seattle-Northwest,
Sutter and UBS.
20787
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change and
Amendment No. 1 Thereto To Make
Clear That the Underlying Index Value
for Portfolio Depository Receipts and
Index Fund Shares Must Be
Disseminated Widely by an
Appropriate Service
April 15, 2005.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
9, 2005, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I, II, and III below, which Items
have been prepared by Nasdaq. On
April 4, 2005, Nasdaq filed Amendment
No. 1 to the proposed rule change.3 The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to make clear in the
generic listing standards for Portfolio
Depository Receipts and Index Fund
Shares that the underlying index value
must be disseminated widely by an
appropriate service. The text of the
proposed rule change, as amended, is
set forth below. Proposed new language
25 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 replaced and superseded the
original filing in its entirety. Amendment No. 1
revises the proposal to indicate that, among other
things, the current index value must be
disseminated by one or more major market data
vendors during the time Portfolio Depository
Receipts and Index Fund Shares trade on Nasdaq.
1 15
E:\FR\FM\21APN1.SGM
21APN1
]]>Agencies
[Federal Register Volume 70, Number 76 (Thursday, April 21, 2005)]
[Notices]
[Pages 20782-20787]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-1879]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51561; File No. SR-MSRB-2005-04]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Proposed Rule Change Relating to
Solicitation of Municipal Securities Business Under MSRB Rule G-38
April 15, 2005.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 22, 2005, the Municipal Securities Rulemaking Board (``MSRB''
or ``Board'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
items I, II and III below, which Items have been prepared by the MSRB.
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 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of The Terms of Substance
of the Proposed Rule Change
The MSRB has filed with the Commission a proposed rule change
deleting existing Rule G-38, on consultants, and replacing it with new
Rule G-38, on solicitation of municipal securities business. In
addition, the proposed rule change would make related amendments to
Rule G-37, on political contributions and prohibitions on municipal
securities business, Rule G-8, on recordkeeping, Form G-37/G-38 and
Form G-37x, as well as add new
[[Page 20783]]
Form G-38t. The text of the proposed rule change, as well as proposed
amended Form G-37, amended Form G-37x and new Form G-38t, are available
on the MSRB's Web site (https://www.msrb.org), at the MSRB's principal
office, and at the Commission's Public Reference Room.
II. Self-Regulatory 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. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
The MSRB began its current rulemaking initiative on the
solicitation on behalf of brokers, dealers and municipal securities
dealers (``dealers'') of municipal securities business\3\ by
consultants\4\ early last year because of certain practices that could
present challenges to maintaining the integrity of the municipal
securities market.\5\ These practices include, among other things,
significant increases in recent years in the number of consultants
being used, the amount these consultants are being paid and the level
of reported political giving by consultants. The MSRB has been
concerned that increases in levels of compensation paid to consultants
for successfully obtaining municipal securities business may be
motivating consultants, who currently are not subject to the basic
standards of fair practice and professionalism embodied in MSRB rules,
to use more aggressive or questionable tactics in their contacts with
issuers. In addition, the MSRB has expressed concern over whether
dealers are uniformly making the required disclosures to issuers and on
Form G-37/G-38, and whether they are undertaking the other required
duties imposed by Rule G-38, for all persons who by their actions
should be considered consultants. The MSRB believes that it would be
appropriate to apply the basic standards of fair practice and
professionalism embodied in MSRB rules to all persons who solicit
municipal securities business on behalf of dealers. The application of
such standards would ensure that all solicitations are undertaken in
accordance with the ethical standards that govern dealer personnel.
---------------------------------------------------------------------------
\3\ Municipal securities business is defined in Rule G-37 as the
purchase of a primary offering from the issuer on other than a
competitive bid basis (e.g., negotiated underwriting), the offer or
sale of a primary offering on behalf of an issuer (e.g., private
placement or offering of municipal fund securities), and the
provision of financial advisory, consultant or remarketing agent
services to an issuer for a primary offering in which the dealer was
chosen on other than a competitive bid basis.
\4\ Current Rule G-38 defines consultant as any person used by a
dealer to obtain or retain municipal securities business through
direct or indirect communication with an issuer on behalf of the
dealer where such communication is undertaken in exchange for
payment from the dealer or any other person.
\5\ See footnotes 14 and 15 infra and accompanying text.
---------------------------------------------------------------------------
Thus, the MSRB has determined to file the proposed rule change with
the Commission.
Summary of Proposed Amendments to Rule G-38
Prohibited Payments. Existing Rule G-38, on consultants, is
replaced in its entirety by new Rule G-38, on solicitation of municipal
securities business. The new rule prohibits dealers from making any
direct or indirect payment to any person who is not an affiliated
person of the dealer for a solicitation of municipal securities
business on behalf of the dealer.
Definitions of Affiliated Person and Affiliated Company. An
affiliated person of a dealer is defined as any partner, director,
officer or employee of the dealer or of an affiliated company. An
affiliated company of a dealer is an entity that controls, is
controlled by or is under common control with the dealer and whose
activities are not limited solely to the solicitation of municipal
securities business. Thus, a dealer affiliate whose activities consist
only of soliciting municipal securities business and that undertakes no
other bona fide activities with respect to the dealer or with respect
to any other affiliated company of the dealer does not qualify as an
affiliated company for purposes of new Rule G-38.\6\
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\6\ This provision is not intended to exclude from the
definition of affiliated company any entity that is a legitimate
member of a dealer's corporate family, so long as such entity's sole
bona fide purpose is not to solicit municipal securities business
for the dealer or for any of the dealer's other affiliated
companies. In the case of a dealer organized as a separately
identifiable department or division of a bank (``SID'') under Rule
G-1, those portions of the bank outside of the SID would be treated
as an affiliated company of the dealer.
---------------------------------------------------------------------------
Definition of Solicitation. Solicitation is defined as a direct or
indirect communication with an issuer for the purpose of obtaining or
retaining municipal securities business.
Transitional Payments and New Form G-38t. Notwithstanding the
foregoing, dealers are permitted to make payments to non-affiliated
persons for solicitations of municipal securities business if such
payments are made with respect solely to solicitation activities
undertaken by such persons on or prior to the date of Commission
approval of the amendments. Such payments are permitted only if (A) the
dealer had been selected by the issuer on or prior to the approval date
of the proposed amendments to engage in such municipal securities
business; \7\ (B) the consultant has not solicited municipal securities
business from any issuer on behalf of the dealer at any time after the
approval date; and (C) the dealer submits to the MSRB, by the last day
of the month following the end of each calendar quarter during which
payments to the consultant are made or remain pending, new Form G-
38t.\8\ The dealer must provide on Form G-38t the same types of
disclosures currently required to be made with respect to consultants
under existing Rule G-38.\9\ The MSRB will make public copies of all
Forms G-38t it receives on its Web site at https://www.msrb.org. The use
of Form G-37/G-38 will be discontinued on the date of Commission
approval of the amendments. All information submitted to the MSRB with
respect to consultants on or after the date of Commission approval must
be submitted on Form G-38t rather than old Form G-37/G-38, even if a
payment required to be reported to the MSRB has
[[Page 20784]]
been made to the consultant prior to such date of approval.
---------------------------------------------------------------------------
\7\ A dealer must be able to provide documentation from the
issuer or other third party of its selection on or prior to the
Commission approval date for the amendments.
\8\ Since it is expected that Form G-38t will be used during
only a short period of time, as discussed below, the MSRB has
elected not to develop an electronic submission system for such
form. Thus, dealers submitting Forms G-38t to the MSRB must send two
copies of the form to the MSRB by certified or registered mail, or
some other equally prompt means that provides a record of sending.
\9\ These disclosures include the name, business address and
role of the consultant, the compensation arrangement, any municipal
securities business obtained or retained by the consultant for which
payment is made or is pending and dollar amounts paid to the
consultant in such quarter for each such item of business, the total
dollar amount paid to each consultant in such calendar quarter, and
the reportable political contributions and reportable political
party payments of the consultant. Each item of municipal securities
business for which payment remains pending must be listed on the
quarterly reports until such quarter in which payment is finally
made, at which time the amount paid must be listed. If no further
payments are to be made to a consultant, such consultant need not be
listed on Form G-38t for subsequent quarters.
---------------------------------------------------------------------------
The MSRB expects that dealers will terminate their contractual
obligations with and remit final payments to consultants promptly
following approval of the amendments by the Commission. The MSRB will
ask the applicable enforcement agencies to review Forms G-38t and the
circumstances of continuing payments to consultants in order to ensure
that such payments are not being made in an attempt to circumvent the
intent of the new rule provisions.
Summary of Proposed Amendments to Rule G-37 and Forms G-37/G-38 and G-
37x
Rule G-37 is amended to (i) delete references and provisions
relating to consultant information provided under Rule G-38, (ii)
reflect that those associated persons who solicit municipal securities
business and thereby are municipal finance professionals include
affiliated persons under Rule G-38, (iii) add a reference to the
definition of solicitation under new Rule G-38, (iv) reflect the
renaming of Form G-37/G-38 as Form G-37, and (v) make section headings
consistent throughout the rule. Form G-37/G-38 is renamed as Form G-37,
and Section IV and the consultant attachment to the form are
deleted.\10\ In addition, Form G-37x is amended to delete references to
the reporting of consultant information.
---------------------------------------------------------------------------
\10\ The form also is amended to reflect the previous renaming
of ``executive officers'' as ``non-MFP executive officers'' under
Rule G-37 and to rename the municipal securities business category
designation of ``private placement'' to ``agency offering'' to more
accurately reflect the nature of this category. The substance of
Section IV and the consultant attachment deleted from the form have
been included in new Form G-38t.
---------------------------------------------------------------------------
Summary of Proposed Amendments to Rule G-8
Rule G-8, on recordkeeping, is amended to require dealers to retain
copies of any submitted Forms G-38t and records of their submission to
the MSRB, as well as to reflect the historical nature of the records
that dealers must retain with respect to the deleted consultant
provisions of existing Rule G-38.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
section 15B(b)(2)(C) of the Act,\11\ which provides that the MSRB's
rules shall ``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 * * *.'' \12\
---------------------------------------------------------------------------
\11\ 15 U.S.C. 78o-4(b)(2)(C).
\12\ Id.
---------------------------------------------------------------------------
The MSRB believes that the proposed rule change is consistent with
the Act because it will further investor protection and the public
interest by ensuring that solicitations of municipal securities
business are undertaken in a manner consistent with standards of fair
practice and professionalism, thereby helping to maintain public trust
and confidence in the integrity of the municipal securities market.
B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB does not believe that the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act since it would apply equally to all dealers.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The MSRB published notices for comment on draft amendments to Rule
G-38 on April 5, 2004 (the ``April 2004 Notice'') \13\ and September
29, 2004 (the ``September 2004 Notice'').\14\ The April 2004 notice
sought comments on draft amendments limiting payments by a dealer for
the solicitation of municipal securities business on its behalf solely
to its associated persons (the ``original draft amendments''). The MSRB
received comments from 28 commentators.\15\
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\13\ See MSRB Notice 2004-11 (April 5, 2004).
\14\ See MSRB Notice 2004-32 (September 29, 2004), as modified
by MSRB Notice 2004-33 (October 12, 2004).
\15\ Letters from Sam Conner, Senior Vice President and Manager
of Public Finance, J.J.B. Hilliard, W.L. Lyons, Inc. (``JJB
Hilliard''), to Kit Taylor, Executive Director, MSRB, dated April
14, 2004; Jerry L. Chapman (``Mr. Chapman''), to Ernesto A. Lanza,
Senior Associate General Counsel, MSRB, dated April 22, 2004; Joe
Jolly, Jr., Joe Jolly & Co., Inc. (``Joe Jolly''), to William J.
Jester, Jr., Chairman, MSRB, dated April 26, 2004; Peter J. Hill,
Managing Director, Public Finance Department, JP Morgan (``JP
Morgan''), to Mr. Taylor dated April 26, 2004; R. Steven Crowley,
President, Nevis Securities, LLC (``Nevis''), to Mr. Lanza dated
April 29, 2004; Dennis G. Ciocca, Senior Managing Director, Sutter
Securities Incorporated (``Sutter'') to Mr. Taylor, dated May 17,
2004; Maud Daudon, Managing Director, Investment Banking, and John
Rose, President & CEO, Seattle-Northwest Securities Corporation
(``Seattle-Northwest'') to Mr. Taylor, dated May 19, 2004; Gordon
Reis III, Managing Principal, Seasongood & Mayer, LLC
(``Seasongood'') to Mr. Taylor, dated May 20, 2004; Hill A.
Feinberg, Chairman & Chief Executive Officer, First Southwest
Company (``First Southwest'') to Mr. Lanza, dated May 26, 2004;
James C. Cervantes, Managing Director & Head of the Public and Non-
Profit Finance Group, and Scott C. Sollers, Managing Director, Stone
& Youngberg (``S&Y'') to Mr. Lanza, dated June 2, 2004; Bruce
Moland, Vice President & Assistant General Counsel, Wells Fargo &
Company (``Wells Fargo''), to Mr. Lanza dated June 2, 2004; Amelia
A.J. Bond, Director of Public Finance, A.G. Edwards & Sons, Inc.
(``AG Edwards''), to Mr. Lanza dated June 3, 2004; Pfilip G. Hunt,
Jr., President, Gardnyr Michael Capital, Inc. (``Gardnyr Michael''),
to Mr. Taylor dated June 3, 2004; G. Douglas Edwards, President &
CEO, Morgan Keegan & Company, Inc. (``Morgan Keegan''), to Mr. Lanza
dated June 3, 2004; Thomas E. Lanctot, Principal and Head of the
Public and Non-Profit Finance Group, William Blair & Company
(``William Blair''), to Mr. Lanza dated June 3, 2004; Sarah A.
Miller, General Counsel, ABA Securities Association (``ABA''), to
Mr. Lanza dated June 4, 2004; Daniel L. Keating, Senior Managing
Director, Bear Stearns & Co., Inc. (``Bear Stearns''), to Mr. Lanza
dated June 4, 2004; Lynette Kelly Hotchkiss, Senior Vice President
and Associate General Counsel, Bond Market Association (``BMA''), to
Mr. Lanza dated June 4, 2004; Martin Cabrera, Jr., President,
Cabrera Capital Markets, Inc. (``Cabrera''), to Mr. Lanza dated June
4, 2004; Robyn A. Huffman, Vice President and Associate General
Counsel, Goldman Sachs & Co. (``Goldman''), to Mr. Lanza dated June
4, 2004; Samuel C. Doyle, Executive Vice President, Kirkpatrick,
Pettis, Smith, Polian Inc. (``Kirkpatrick''), to Mr. Jester dated
June 4, 2004; Mike Dunn, Merchant Capital LLC (``Merchant''), to the
MSRB dated June 4, 2004; John J. Lawlor, Managing Director,
Municipal Markets, Merrill Lynch (``Merrill''), to Mr. Lanza dated
June 4, 2004; Andrew Garvey, Managing Director, Morgan Stanley & Co.
Incorporated (``Morgan Stanley''), to Mr. Lanza dated June 4, 2004;
Bernard Beal, Chief Executive Officer, M.R. Beal & Company (``MR
Beal''), to Mr. Lanza dated June 4, 2004; James S. Keller, Chief
Regulatory Counsel, PNC Capital Markets, Inc. (``PNC''), to Mr.
Lanza dated June 4, 2004; Terry L. Atkinson, Managing Director &
Director, Municipal Securities Group, UBS Financial Services Inc.,
to Mr. Lanza dated June 4, 2004 (``UBS''); and Frank Y. Chin,
Managing Director, Public Finance Department, Municipal Securities
Division, Citigroup Global Markets, Inc. (``Citigroup''), to Mr.
Lanza dated June 7, 2004.
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The September 2004 notice sought comments on revised draft
amendments to Rule G-38 (the ``revised draft amendments'') prohibiting
a dealer from making payments for the solicitation of municipal
securities business on its behalf to any person who is not an
associated person of the dealer. The revised draft amendments would
have imposed additional obligations on dealers with respect to any
solicitor who is not a partner, director, officer or employee. These
obligations would have included the entering into of a contractual
agreement, the subjecting of such solicitors to MSRB rules (including
but not limited to Rule G-37) with respect to their solicitation
activities, and the disclosure of arrangements relating to such
solicitors. The MSRB received comments from 19 commentators.\16\
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\16\ Letters from Mr. Ciocca (``Mr. Ciocca'') to Mr. Lanza dated
December 8, 2004; Mr. Hunt, Gardnyr Michael, to Mr. Taylor dated
December 10, 2004; Ms. Daudon and Mr. Rose, Seattle-Northwest, to
Mr. Lanza dated December 13, 2004; Mr. Feinberg, First Southwest, to
Mr. Lanza dated December 14, 2004; Mr. Moland, Wells Fargo, to Mr.
Lanza dated December 15, 2004; Robert A. Estrada, Chairman & CEO,
Estrada Hinojosa & Company, Inc. (``Estrada''), to Mr. Lanza dated
December 15, 2004; Ms. Hotchkiss, BMA, to Mr. Lanza dated December
15, 2004; Ms. Huffman, Goldman, to Mr. Lanza dated December 15,
2004; Mr. Garvey, Morgan Stanley, to Mr. Lanza dated December 15,
2004; Mr. Atkinson, UBS, to Mr. Lanza dated December 15, 2004; Glenn
Green, Vice President--Municipal Compliance, Wachovia Securities
(``Wachovia''), to Mr. Lanza dated December 15, 2004; Mr. Lanctot,
William Blair, to Mr. Lanza dated December 15 and December 16, 2004;
Ronald J. Dieckman, Senior Vice President & Director, Municipal Bond
Department, JJB Hilliard, to Mr. Lanza; Lawrence C. Holtz,
President, Fixed Income Group, RBC Dain Rauscher (``Dain
Rauscher''), to Mr. Lanza; Ms. Miller, ABA, to Mr. Lanza dated
December 17, 2004; Mr. Doyle, Kirkpatrick, to Mr. Taylor dated
December 17, 2004; Mr. Keating, Bear Stearns, to Mr. Lanza dated
December 20, 2004; Mr. Lawlor, Merrill, to Mr. Lanza dated January
20, 2005; and the Honorable Rick Santorum, United States Senate
(``Sen. Santorum''), to Mr. Lanza dated February 16, 2005.
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[[Page 20785]]
The comments received on the April and September 2004 Notices are
discussed below.
Need for Regulatory Action on Solicitation of Municipal Securities
Business
Comments Received. Many commentators believe that consultants are
beneficial and allow dealers, especially smaller regional dealers, to
maximize their limited resources and compete with larger national
dealers.\17\ Some of these commentators express concern that the
amendments would negatively impact such dealers, with the BMA stating
that the proposal may practically eliminate an entire segment of the
municipal securities industry. The BMA and Sen. Santorum state that the
use of consultants increases competition and provides issuers with
greater choice, thereby resulting in ``better service at lower rates.''
In addition, they argue that consultants that have a local presence
``have unique knowledge regarding the local issuer's needs and
requirements,'' thereby improving the effectiveness of the dealer at
servicing the issuer. Merrill Lynch notes that ``the municipal
marketplace is uniquely fragmented, covering myriad issuers in diverse
locations.'' It argues that consultants are necessary to providing
quality service to such a diverse market. UBS states that disclosure of
consultant practices is better than a prohibition on using consultants.
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\17\ See comments of Bear Stearns, BMA, Cabrera, Citigroup,
Gardnyr Michael, Goldman Sachs, JJB Hilliard, Merrill Lynch, Morgan
Stanley, MR Beal, Nevis, PNC, Sen. Santorum, Sutter, UBS and William
Blair.
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Other commentators believe that there is a significant problem with
the use of consultants that is appropriately addressed by requiring
that solicitation activity be undertaken only by persons subject to
MSRB rules.\18\ JP Morgan agrees ``that eliminating the use of
consultants who are not associated persons will advance the * * *
standards of fair practice and professionalism embodied in the Board's
rules and in the rules and regulations that govern all activities of
brokers, dealers and municipal securities dealers and their associated
persons.'' It views the original draft amendments as ``a sensible
regulatory response to the increasing and evolving use of third parties
to solicit municipal securities business.'' Seattle-Northwest states
that ``removing the opportunity for improper conduct by consultants
would result overall in an improved environment for issuance of
municipal securities.'' Wells Fargo believes that the original draft
amendments have ``the benefit of removing the ability of a dealer to
indirectly evade the `pay to play' prohibitions * * * through the use
of consultants.''
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\18\ See comments of ABA, Mr. Chapman, Mr. Ciocca, Joe Jolly, JP
Morgan, Kirkpatrick, Morgan Keegan, Seasongood, Seattle-Northwest
and Wells Fargo.
---------------------------------------------------------------------------
The BMA contends that the amendments are not warranted, stating
that the MSRB relies on possible abusive practices and speculative
risks that have not been shown to exist. It questions whether there has
been a significant increase in contributions by consultants and further
states that, ``regardless of the level of the contributions being made,
there is no indication whatsoever that Consultant contributions are
being used to influence decisions regarding municipal securities
business.'' The BMA states that coupling Rule G-37(d), on indirect
violations, with the existing disclosure requirements of Rule G-38
provides an effective means for addressing the MSRB's concerns.
With regard to compensation, the BMA argues that the increase in
payments to consultants ``does not in any way indicate or imply that
Consultants are engaging in pay-to-play or that there is added pressure
on Consultants to engage in aggressive or abusive practices. Rather,
the recent increase in compensation appears to be attributable to the
significant increase in the volume and size of municipal securities
deals.'' On the other hand, AG Edwards, Citigroup, Goldman, Merrill and
William Blair state that they would support a prohibition on contingent
compensation arrangements or ``success'' fees paid to consultants.
However, S&Y opposes the imposition of restrictions on the type and
amount of compensation paid to consultants.
MSRB Response. After a careful and thorough review of industry
comments on the April and September 2004 Notices, the MSRB has
concluded that regulatory action in this area is warranted, based on
the concerns previously expressed by the MSRB in such notices and
continuing revelations of questionable activities involving issuer
personnel, dealers, other financial services organizations, and third-
party intermediaries. Such activities have the potential to severely
undermine public confidence in the municipal securities market. The
existing consultant disclosure requirements under current Rule G-38
have assisted the MSRB in determining that action is necessary in this
area but cannot serve as a substitute for such action. The MSRB
believes that the proposed rule change represents a meaningful step
toward further ensuring the continued integrity of the municipal
securities market. The MSRB also believes that the benefits to the
municipal securities market resulting from the proposed rule change
outweigh the benefits that would accrue to permitting consultants to
continue soliciting municipal securities business on behalf of dealers.
Furthermore, the MSRB received comments both in favor of and in
opposition to the original draft amendments from large national firms
and small or regional firms. Taken as a whole, the comments do not
provide persuasive evidence that the proposed rule change would have a
disparate effect on different types of dealers.
Other Unregulated Municipal Securities Industry Participants
Comments Received. Many commentators are concerned that, although
the problems associated with pay-to-play in the municipal securities
industry are not limited to dealers, only dealers are subject to
regulation in this area.\19\ First Southwest and Kirkpatrick observe
that any problem that may exist requires a broader response than
restrictions applicable only to dealers. Several commentators also
believe that current MSRB rules may permit dealers with affiliated
banks to use these banks to circumvent MSRB rules.\20\ They urge the
MSRB to coordinate efforts with the Commission, NASD and others to
apply pay-to-play limits to financial advisors,
[[Page 20786]]
derivatives advisors, bond lawyers and other market participants.
---------------------------------------------------------------------------
\19\ See comments of Mr. Chapman, First Southwest, Kirkpatrick,
Merrill and Morgan Keegan.
\20\ See comments of Goldman, Merchant, Morgan Stanley and
William Blair. 20
---------------------------------------------------------------------------
MSRB Response. The MSRB recognizes that other participants in the
municipal securities industry face the same types of challenges as does
the dealer community. Given the limited jurisdictional reach of MSRB
rules, however, a more complete response to concerns in this area
requires voluntary action on the part of the unregulated parties in the
municipal securities market. The MSRB strongly encourages other
industry participants--including but not limited to financial advisers,
lawyers and swap participants--to take affirmative steps to ensure the
integrity of their portion of the marketplace and toward severing the
connection of political contributions and other payments that benefit
public officials and their surrogates from the awarding of contracts
relating to the municipal securities, derivative products and other
financial activities of issuers. The MSRB observes that the failure of
such other parties to take meaningful steps to deter potential
conflicts of interests and other possibly abusive practices may merit
further consideration by the Commission or Congress.
Effect of Becoming an Associated Person
Comments Received. Many commentators note that the associated
person concept used in the draft amendments triggers requirements under
the Exchange Act and rules of other self-regulatory organizations, and
can also raise state tax and labor law issues.\21\ They argue that
these non-MSRB requirements may be practically impossible to apply to
many solicitors. Several commentators also state that there is no
guidance as to how solicitors serving multiple dealers are to be
supervised.
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\21\ See comments of BMA, Gardnyr Michael, Goldman, Morgan
Stanley, PNC, UBS and William Blair.
---------------------------------------------------------------------------
MSRB Response. The MSRB recognizes the concerns over the associated
person concept. The MSRB's intent in using the associated person
concept in the draft amendments was to ensure that outside solicitors
were fully subject to MSRB rules and did not extend to making other
legal requirements applicable to such solicitors. The MSRB has
therefore abandoned the associated person concept in the proposed rule
change. The MSRB believes that, as formulated, the proposed rule change
does not raise the concerns expressed by these commentators.
Apply Only G-37 to Consultants
Comments Received. Many commentators suggest that the applicability
of MSRB rules to solicitors be limited to Rule G-37 itself, or that the
MSRB draft new provisions having varying degrees of similarity to those
of Rule G-37.\22\
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\22\ See comments of AG Edwards, BMA, Gardnyr Michael, Goldman,
Merrill, Morgan Stanley, S&Y and William Blair.
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MSRB Response. The MSRB disagrees that only Rule G-37, and not the
other rules of the MSRB, should apply to the activities of solicitors.
As noted above, one of the principal purposes of this proposal was to
make the process of soliciting municipal securities business subject to
the standards of fair practice and professionalism that apply to the
other municipal securities activities of dealers. Imposition solely of
Rule G-37 would fall short of this objective.
Suggested Alternative
Comments Received. The BMA suggests that, as an alternative means
of subjecting consultants to fair practice and professionalism
standards, the MSRB require that such standards be embodied in a
dealer's agreement with its consultant. It suggests that the consultant
agreement include provisions that would impose by contract the
requirements of certain MSRB rules, such as Rules G-17, G-20 and G-37,
as well as assurances of compliance with state and local ethics,
conflicts of interest, and lobbying disclosures laws. The alternative
proposal would, however, limit the application of Rule G-37 so as to
impose prohibitions on certain contributions by consultants, rather
than imposing a ban on municipal securities business on the dealer as a
result of such contributions. In addition, failure by consultants to
comply with their contractual obligations would result in termination
of such contracts and a prohibition on dealers engaging consultants who
have previously violated their consultant contracts. Dealers would not
be subject to rule violations as a result of a consultant's violation
of its contractual obligation. Bear Stearns, Dain Rauscher, Goldman,
JJB Hilliard, Merrill, Morgan Stanley, UBS, and William Blair support
this approach, particularly with respect to the more limited
application of Rule G-37 to contributions made by consultants.
MSRB Response. Although the suggested contractual alternative to
the revised draft amendments might provide some incremental improvement
in the regulation of solicitation of municipal securities business over
the existing rule, the MSRB believes that its concerns dictate that the
MSRB take significantly more decisive action that ensures that dealers
are fully responsible for solicitation activities undertaken for their
benefit.
Definition of Solicitation
Comments Received. The BMA states that the term solicitation should
be limited to ``activity aimed at an issuer'' out of concern that any
communication with a third party regarding a municipal securities issue
could potentially become a solicitation of an issuer if the third party
passes such communication on to the issuer. Many commentators are
concerned with specific scenarios where they believe that certain types
of communications should not be considered solicitations, particularly
where communications are directed at conduit borrowers or where small
payments are made in exchange for a communications.
MSRB Response. The MSRB considered the comments related to the
definition of solicitation included in the April 2004 Notice and
provided more specific guidance with respect to this definition in the
September 2004 Notice. Although such guidance in the September 2004
Notice represents the MSRB's current view regarding this definition,
comments received on this topic have been taken under advisement for
further consideration by the MSRB.
Constitutionality of Proposal
Comments Received. The BMA states that the draft amendments would
violate the First Amendment of the U.S. Constitution by requiring
consultants to become municipal finance professionals (``MFPs'') under
Rule G-37. The BMA argues that the U.S. Supreme Court has equated
political contributions with protected speech, and any restriction on
speech must be narrowly tailored to advance a compelling governmental
interest. It further asserts that, assuming for the sake of argument
that pay-to-play problems exist relating to consultants, the draft
amendments' restrictions ``far exceed what would be necessary to
address that problem.''
MSRB Response. In upholding the constitutionality of Rule G-37 in
Blount v. SEC,\23\ the courts recognized that, at its core, the rule
was intended to sever the connection between the making of political
contributions and the awarding of municipal securities business. The
rule as then written (and as found constitutional) applied to various
[[Page 20787]]
categories of persons associated with dealers in addition to those who
solicit municipal securities business. For example, the rule covers
those persons who underwrite or trade municipal securities or who
supervise such activities. Given that the act of soliciting municipal
securities business more closely touches on the core purpose of Rule G-
37 than do some of the other municipal securities activities that are
undertaken by persons already treated as MFPs and therefore
demonstrates a particularly close nexus between the actions the MSRB
seeks to regulate and the purpose of its rulemaking, the MSRB continues
to firmly believe that the argument that it is unconstitutional to
require a person who solicits municipal securities business on behalf
of a dealer to be treated as an MFP subject to Rule G-37 has no merit.
The current formulation of the proposed rule change, which effectively
prohibits paid outside consultants rather than requiring that such
consultants become MFPs subject to Rule G-37, further negates this
argument.
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\23\ Blount v. SEC, 61 F. 3d 938 (D.C. Cir. 1995), cert. denied,
116 S. Ct. 1351 (1996).
---------------------------------------------------------------------------
Effective Date
Comments Received. Several commentators express concern about
existing contractual obligations if the draft amendments were to be
adopted and urge the MSRB to make the effective date apply
prospectively so as not to disrupt or dismantle existing contracts.\24\
---------------------------------------------------------------------------
\24\ See comments of BMA, Seattle-Northwest, Sutter and UBS.
---------------------------------------------------------------------------
MSRB Response. The proposed rule change prohibits dealers from
making any payments for solicitation activities undertaken by non-
affiliated persons after the date of Commission approval of the
amendments. The provisions of the proposed rule change permitting
certain transitional payments for solicitation activities undertaken by
consultants prior to the approval of the amendments should address the
commentators' concerns.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
A. By order approve such proposed rule change; or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
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
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-MSRB-2005-04 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-MSRB-2005-04. This
file number should be included on the subject line if e-mail 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 (https://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 MSRB's
offices. 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 SR-
MSRB-2005-04 and should be submitted on or before June 6, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1879 Filed 4-20-05; 8:45 am]
BILLING CODE 8010-01-P
