Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change Relating to Amendments to MSRB Rules G-37 and G-8 and Form G-37, 20156-20158 [2013-07711]

Download as PDF 20156 Federal Register / Vol. 78, No. 64 / Wednesday, April 3, 2013 / Notices SECURITIES AND EXCHANGE COMMISSION [Release Nos. 33–9397; 34–69257, File No. 265–28] Dodd-Frank Investor Advisory Committee Securities and Exchange Commission. ACTION: Notice of Meeting of Securities and Exchange Commission Dodd-Frank Investor Advisory Committee. AGENCY: The Securities and Exchange Commission Investor Advisory Committee, established pursuant to Section 911 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, is providing notice that it will hold a public meeting on Thursday, April 11, 2013, in Multi-Purpose Room LL–006 at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. The meeting will begin at 10:00 a.m. (EDT) and end at 4:00 p.m. and will be open to the public, except during portions of the meeting reserved for meetings of the Committee’s subcommittees. The meeting will be webcast on the Commission’s Web site at www.sec.gov. Persons needing special accommodations to take part because of a disability should notify the contact person listed below. The public is invited to submit written statements to the Committee. The agenda for the meeting includes: (i) Approval of minutes; (ii) consideration of a recommendation of the Investor as Purchaser subcommittee regarding target date funds; (iii) subcommittee meetings; and (iv) subcommittee updates. SUMMARY: Written statements should be received on or before April 11, 2013. ADDRESSES: Written statements may be submitted by any of the following methods: DATES: Electronic Statements ∑ Use the Commission’s Internet submission form (https://www.sec.gov/ rules/other.shtml); or ∑ Send an email message to rulescomments@sec.gov. Please include File No. 265–28 on the subject line; or mstockstill on DSK4VPTVN1PROD with NOTICES Paper Statements ∑ Send paper statements in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, Stop 1090, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File No. 265–28. This file number should be included on the subject line if email is VerDate Mar<15>2010 17:13 Apr 02, 2013 Jkt 229001 used. To help us process and review your statement more efficiently, please use only one method. Statements also will be available for Web site viewing and printing in the Commission’s Public Reference Room, 100 F Street NE., Room 1580, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. All statements received will be posted without change; we do not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. FOR FURTHER INFORMATION CONTACT: M. Owen Donley, Chief Counsel, at (202) 551–6322, Office of Investor Education and Advocacy, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549. Dated: March 29, 2013. Kevin O’Neill, Deputy Secretary. [FR Doc. 2013–07718 Filed 4–2–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69249; File No. SR–MSRB– 2013–01] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Order Granting Approval of a Proposed Rule Change Relating to Amendments to MSRB Rules G–37 and G–8 and Form G–37 March 28, 2013. I. Introduction On February 4, 2013, the Municipal Securities Rulemaking Board (‘‘MSRB’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change consisting of amendments to MSRB Rules G–37, on political contributions and prohibitions on municipal securities business, and G–8, on books and records, and Form G–37. The proposed rule change was published for comment in the Federal Register on February 14, 2013.3 The Commission received four comment letters on the proposal.4 The MSRB 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 Securities Exchange Act Release No. 68872 (February 8, 2013), 78 FR 10656 (‘‘Notice’’). 4 See Letters to Elizabeth M. Murphy, Secretary, Commission, from Robert W. Doty, President, AGFS and Senior Advisor, Government Financial Strategies, Inc., dated February 20, 2013 (‘‘AGFS 2 17 PO 00000 Frm 00070 Fmt 4703 Sfmt 4703 submitted a response on March 26, 2013.5 This order approves the proposed rule change. II. Description of the Proposed Rule Change MSRB Rule G–37 requires dealers to disclose on Form G–37 certain contributions to issuer officials, contributions to bond ballot campaigns, and payments to political parties of states and political subdivisions, made by brokers, dealers and municipal securities dealers (‘‘dealers’’), their municipal finance professionals (‘‘MFPs’’), political action committees controlled by the dealer or their MFPs or non-MFP executive officers (collectively, ‘‘covered parties’’). Further, MSRB Rule G–37 prohibits dealers from engaging in municipal securities business with an issuer within two years after contributions are made by certain covered parties (other than certain permitted de minimis contributions) to an official of such issuer. The rule’s prohibition on engaging in municipal securities business, however, is currently not triggered by contributions made to bond ballot campaigns by covered parties. MSRB Rule G–37 also requires dealers to maintain records of reportable contributions to bond ballot campaigns pursuant to MSRB Rule G–8. The MSRB proposes to revise MSRB Rule G–37(e)(i)(B)(2) to provide that, in disclosing the contribution amount made to a bond ballot campaign, the dealer also must include, in the case of in-kind contributions, the value and nature of the goods or services provided, including any ancillary services provided to, on behalf of, or in furtherance of, the bond ballot campaign. The proposed rule change also requires dealers to disclose the specific date on which such contributions to bond ballot campaigns were made. The MSRB also proposes to revise MSRB Rule G–37(e)(i)(B) to require dealers to disclose the full issuer name and full issue description of any primary offering resulting from voter approval of a bond ballot measure to Letter’’) and Jeanine Rodgers Caruso, President, National Association of Independent Public Finance Advisors, dated March 12, 2013 (‘‘NAIPFA Letter’’). See also, Letters to Ronald W. Smith, Corporate Secretary, MSRB, from Ellen S. Miller, Co-Founder and Executive Director, The Sunlight Foundation, dated March 5, 2013 (‘‘Sunlight Letter’’) and Kamala Harris, Attorney General, Department of Justice, from Bill Lockyer, Treasurer, State of California, dated March 18, 2013 (‘‘AG Letter’’). 5 See Letter to Elizabeth M. Murphy, Secretary, Commission, from Gary L. Goldsholle, General Counsel, MSRB, dated March 26, 2013. E:\FR\FM\03APN1.SGM 03APN1 mstockstill on DSK4VPTVN1PROD with NOTICES Federal Register / Vol. 78, No. 64 / Wednesday, April 3, 2013 / Notices which a contribution required to be disclosed has been made. All information is required to be reported in the calendar quarter in which the closing date for the issuance that was authorized by the bond ballot measure occurred. The proposed rule change also contains a look-back provision for bond ballot campaign contributions that are made by an MFP or a non-MFP executive officer during the two years prior to an individual becoming an MFP or a non-MFP executive officer of a dealer. The look-back provision limits the additional disclosures required under proposed MSRB Rule G– 37(e)(i)(B) to those items that would have been required to be disclosed if such individual had been an MFP or a non-MFP executive officer at the time of the contribution. The proposed revisions to MSRB Rule G–37(e)(i)(B) also require dealers to disclose the reportable date of selection on which the dealer was selected to engage in municipal securities business. Furthermore, proposed revisions to MSRB Rule G–37(e)(i)(B) require dealers to disclose both the amount and source of any payments or reimbursements related to any bond ballot contribution received by a dealer or its MFPs from any third party.6 The MSRB also proposes to revise MSRB Rule G–37(g) to expand the definition of ‘‘contribution’’ and add a new defined term, the ‘‘reportable date of selection.’’ The proposed amendments to the definition of ‘‘contribution’’ would distinguish between contributions made to an official of an issuer and contributions made to a bond ballot campaign. The term ‘‘reportable date of selection’’ would be defined to mean to the date of the earliest to occur of: (1) The execution of an engagement letter; (2) the execution of a bond purchase agreement; or (3) the receipt of formal notification (provided either in writing or orally) from or on behalf of the issuer that the dealer has been selected to engage in municipal securities business. Lastly, the MSRB proposes conforming amendments to MSRB Rule G–8(a)(xvi)(H) and (I) to require dealers to maintain records of the supplemental information related to bond ballot campaign contributions that are required to be disclosed on Form G–37 under the proposed rule change. III. Summary of Comments Received and the MSRB’s Response As previously noted, the Commission received four comment letters on the proposed rule change and a response 6 Third parties include issuers. VerDate Mar<15>2010 17:13 Apr 02, 2013 Jkt 229001 from the MSRB.7 Two commenters expressed general support for the proposed rule change.8 One commenter found the proposed disclosure requirements to be inadequate.9 One commenter addressed state law matters, which are not the subject of the proposed rule change.10 A. General Support to the Proposed Rule Change One commenter noted that the proposed rule change is necessary in order to gather information for evaluation of potential further actions in response to circumstances suggesting corruption and unfair dealing in gaining employment and participating in municipal securities issuances approved by voters.11 Another commenter stated that improving ‘‘public disclosure of bond ballot campaign contributions is fundamental to helping citizens be better informed about possible conflicts of interest and any ‘‘pay-to-play’’ schemes that might be occurring in the underwriting of bonds.’’ 12 B. Disclosure Requirements are Inadequate One commenter also requested that the MSRB ‘‘further improve transparency and accountability by making municipal securities information available in an open, standardized format and by using nonproprietary unique identifiers.’’ 13 In response, the MSRB stated that none of these requests were the subject of the proposed rule change but that the MSRB will keep these requests under advisement as it considers future enhancements to its political contribution transparency initiatives. Another commenter stated that the proposed disclosure requirements are inadequate to curtail actual or perceived quid pro quo practices with respect to bond ballot campaign contributions.14 Moreover, this commenter noted that the MSRB’s First Amendment concerns are unwarranted in light of the Supreme Court’s decision in Citizens United v. FEC.15 This commenter suggested that additional steps beyond disclosure requirements are necessary to address the issue, either by way of a direct 7 See supra notes 4 and 5. Sunlight Letter and AGFS Letter. 9 See NAIPFA Letter. 10 See AG Letter. Because the AG Letter relates to subject matters not directly relevant to the proposed rule change, the Commission does not address the comment herein. 11 See AGFS Letter. 12 See Sunlight Letter. 13 Id. 14 See NAIPFA Letter. 15 558 U.S. 310 (2010). 8 See PO 00000 Frm 00071 Fmt 4703 Sfmt 4703 20157 contribution ban, or an indirect expenditure limit.16 ‘‘Contributions to bond ballot campaign committees are, in fact, direct in nature and, because of the evidence of actual or perceived quid pro quo, such contributions should be prohibited in order to prevent quid pro quo from continuing to occur.’’ 17 If bond ballot campaign committee contributions are determined to be indirect expenditures, this commenter urged the Commission to place limits on such expenditures as a result of past and ongoing quid pro quo. This commenter also suggested that bond ballot campaign committee contributions be limited to $200 per election and be combined with a ban on business in the event such contributions exceed this amount. Furthermore, the commenter suggested that, if the above-referenced recommendations are not implemented, the proposed rule change should be amended to require disclosure of contributions contemporaneously or within a reasonable amount of time after the contribution is made. The commenter argued that the current proposed quarterly disclosure timetable is insufficient to curtail the actual or perceived quid pro quo, because ‘‘in all likelihood, an election will have concluded long before the disclosures are ever made, which will diminish whatever informative value such disclosures may have to the voting public.’’ In response, the MSRB noted it has previously acknowledged and responded to similar comments, including those received pursuant to a request for comment to the public,18 which were specifically addressed in the Notice. In addition, the MSRB reiterated that approval of the proposed rule change does not foreclose additional rulemaking in the future. IV. Discussion and Commission Findings The Commission has carefully considered the proposed rule change, as well as the comment letters received and the MSRB’s response, and finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB. 19 In particular, the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act, which provides that the MSRB’s rules shall be designed to prevent fraudulent 16 Id. 17 Id. 18 See MSRB Notice 2012–43 (August 15, 2012). approving the proposed rule change, the Commission has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 19 In E:\FR\FM\03APN1.SGM 03APN1 20158 Federal Register / Vol. 78, No. 64 / Wednesday, April 3, 2013 / Notices 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 and municipal financial products, to remove impediments to and perfect the mechanism of a free and open market in municipal securities and municipal financial products, and, in general, to protect investors, municipal entities, obligated persons, and the public interest.20 The proposed rule change is consistent with Section 15B(b)(2)(C) of the Act, because it is intended to protect investors and the public interest and prevent fraudulent and manipulative acts and practices by adding greater specificity to the public disclosures required for contributions made by covered parties to bond ballot campaigns and any municipal securities business awarded pursuant to such bond ballot measure. Market participants will have access to such public information in a centralized format on the MSRB’s Web site through Form G–37, which will increase market transparency and strengthen market integrity of the municipal securities market. The information will help shed light on ongoing market concerns of pay-to-play practices with respect to bond ballot campaign contributions. The MSRB has also represented that the revisions to MSRB Rule G–37 will assist the MSRB in its continuing review of MSRB Rule G–37 and whether any additional disclosure requirements are desirable to address other practices that may present challenges to the integrity of the municipal securities market related to political contributions by dealers and dealer personnel. Furthermore, the MSRB has noted that approval of the proposed rule change does not foreclose additional rulemaking in the future. For these reasons, the Commission believes that the proposed rule change is consistent with the Act. mstockstill on DSK4VPTVN1PROD with NOTICES V. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to the MSRB, and in particular, Section 15B(b)(2)(C) of the Act. The proposal will become effective no later than the start of the second calendar quarter following the date of this order. 20 15 U.S.C. 78o–4(b)(2)(C). VerDate Mar<15>2010 17:13 Apr 02, 2013 Jkt 229001 It is therefore ordered, pursuant to Section 19(b)(2) of the Act,21 that the proposed rule change (SR–MSRB–2013– 01) be, and hereby is, approved. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Kevin M. O’Neill, Deputy Secretary. In its filing with the Commission, the self-regulatory organization 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 those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. [FR Doc. 2013–07711 Filed 4–2–13; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–69255; File No. SR– NYSEMKT–2013–28] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Its Option Trading Rules To Extend the Operation of Its Pilot Program Regarding Minimum Value Sizes for Flexible Exchange Options Until March 31, 2014 March 28, 2013. Pursuant to Section 19(b)(1) 1 of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that on March 19, 2013, NYSE MKT LLC (the ‘‘Exchange’’ or ‘‘NYSE MKT’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its option trading rules to extend the operation of its pilot program (‘‘Pilot Program’’) regarding minimum value sizes for flexible exchange options (‘‘FLEX Options’’), currently scheduled to expire on March 29, 2013, until March 31, 2014. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. A. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange hereby proposes to amend its option trading rules to extend the operation of its Pilot Program regarding minimum value sizes for FLEX Options, currently scheduled to expire on March 29, 2013,4 until March 31, 2014. This filing does not propose any substantive changes to the Pilot Program and contemplates that all other terms of FLEX Options will remain the same. Overall, the Exchange believes that extending the Pilot Program will benefit public customers and other market participants who will be able to use FLEX Options to manage risk for smaller portfolios. In support of the proposed extension of the Pilot Program, and as required by the terms of the Pilot Program’s implementation,5 the Exchange has submitted to the Securities and Exchange Commission (‘‘SEC’’ or ‘‘Commission’’) a Pilot Program Report that provides an analysis of the Pilot Program covering the period during which the Pilot Program has been in effect. This Pilot Program Report includes (i) data and analysis on the open interest and trading volume in (a) FLEX Equity Options that have opening transactions with a minimum size of 0 to 249 contracts and less than $1 million in underlying value; (b) FLEX Index Options that have opening transactions with a minimum opening size of less than $10 million in underlying equivalent value; and (ii) analysis on the types of investors that initiated opening FLEX Equity and Index Options transactions (i.e., institutional, high net 21 15 22 17 PO 00000 Frm 00072 Fmt 4703 Sfmt 4703 4 See Securities Exchange Act Release No. 66649 (March 23, 2012), 77 FR 19047 (March 29, 2012) (SR–NYSEAmex–2012–18). 5 See infra note 6. E:\FR\FM\03APN1.SGM 03APN1

Agencies

[Federal Register Volume 78, Number 64 (Wednesday, April 3, 2013)]
[Notices]
[Pages 20156-20158]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07711]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69249; File No. SR-MSRB-2013-01]


Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Granting Approval of a Proposed Rule Change Relating to 
Amendments to MSRB Rules G-37 and G-8 and Form G-37

March 28, 2013.

I. Introduction

    On February 4, 2013, the Municipal Securities Rulemaking Board 
(``MSRB'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change consisting of amendments to MSRB Rules G-37, on 
political contributions and prohibitions on municipal securities 
business, and G-8, on books and records, and Form G-37. The proposed 
rule change was published for comment in the Federal Register on 
February 14, 2013.\3\ The Commission received four comment letters on 
the proposal.\4\ The MSRB submitted a response on March 26, 2013.\5\ 
This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 68872 (February 8, 
2013), 78 FR 10656 (``Notice'').
    \4\ See Letters to Elizabeth M. Murphy, Secretary, Commission, 
from Robert W. Doty, President, AGFS and Senior Advisor, Government 
Financial Strategies, Inc., dated February 20, 2013 (``AGFS 
Letter'') and Jeanine Rodgers Caruso, President, National 
Association of Independent Public Finance Advisors, dated March 12, 
2013 (``NAIPFA Letter''). See also, Letters to Ronald W. Smith, 
Corporate Secretary, MSRB, from Ellen S. Miller, Co-Founder and 
Executive Director, The Sunlight Foundation, dated March 5, 2013 
(``Sunlight Letter'') and Kamala Harris, Attorney General, 
Department of Justice, from Bill Lockyer, Treasurer, State of 
California, dated March 18, 2013 (``AG Letter'').
    \5\ See Letter to Elizabeth M. Murphy, Secretary, Commission, 
from Gary L. Goldsholle, General Counsel, MSRB, dated March 26, 
2013.
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II. Description of the Proposed Rule Change

    MSRB Rule G-37 requires dealers to disclose on Form G-37 certain 
contributions to issuer officials, contributions to bond ballot 
campaigns, and payments to political parties of states and political 
subdivisions, made by brokers, dealers and municipal securities dealers 
(``dealers''), their municipal finance professionals (``MFPs''), 
political action committees controlled by the dealer or their MFPs or 
non-MFP executive officers (collectively, ``covered parties''). 
Further, MSRB Rule G-37 prohibits dealers from engaging in municipal 
securities business with an issuer within two years after contributions 
are made by certain covered parties (other than certain permitted de 
minimis contributions) to an official of such issuer. The rule's 
prohibition on engaging in municipal securities business, however, is 
currently not triggered by contributions made to bond ballot campaigns 
by covered parties. MSRB Rule G-37 also requires dealers to maintain 
records of reportable contributions to bond ballot campaigns pursuant 
to MSRB Rule G-8.
    The MSRB proposes to revise MSRB Rule G-37(e)(i)(B)(2) to provide 
that, in disclosing the contribution amount made to a bond ballot 
campaign, the dealer also must include, in the case of in-kind 
contributions, the value and nature of the goods or services provided, 
including any ancillary services provided to, on behalf of, or in 
furtherance of, the bond ballot campaign. The proposed rule change also 
requires dealers to disclose the specific date on which such 
contributions to bond ballot campaigns were made.
    The MSRB also proposes to revise MSRB Rule G-37(e)(i)(B) to require 
dealers to disclose the full issuer name and full issue description of 
any primary offering resulting from voter approval of a bond ballot 
measure to

[[Page 20157]]

which a contribution required to be disclosed has been made. All 
information is required to be reported in the calendar quarter in which 
the closing date for the issuance that was authorized by the bond 
ballot measure occurred. The proposed rule change also contains a look-
back provision for bond ballot campaign contributions that are made by 
an MFP or a non-MFP executive officer during the two years prior to an 
individual becoming an MFP or a non-MFP executive officer of a dealer. 
The look-back provision limits the additional disclosures required 
under proposed MSRB Rule G-37(e)(i)(B) to those items that would have 
been required to be disclosed if such individual had been an MFP or a 
non-MFP executive officer at the time of the contribution. The proposed 
revisions to MSRB Rule G-37(e)(i)(B) also require dealers to disclose 
the reportable date of selection on which the dealer was selected to 
engage in municipal securities business. Furthermore, proposed 
revisions to MSRB Rule G-37(e)(i)(B) require dealers to disclose both 
the amount and source of any payments or reimbursements related to any 
bond ballot contribution received by a dealer or its MFPs from any 
third party.\6\
---------------------------------------------------------------------------

    \6\ Third parties include issuers.
---------------------------------------------------------------------------

    The MSRB also proposes to revise MSRB Rule G-37(g) to expand the 
definition of ``contribution'' and add a new defined term, the 
``reportable date of selection.'' The proposed amendments to the 
definition of ``contribution'' would distinguish between contributions 
made to an official of an issuer and contributions made to a bond 
ballot campaign. The term ``reportable date of selection'' would be 
defined to mean to the date of the earliest to occur of: (1) The 
execution of an engagement letter; (2) the execution of a bond purchase 
agreement; or (3) the receipt of formal notification (provided either 
in writing or orally) from or on behalf of the issuer that the dealer 
has been selected to engage in municipal securities business.
    Lastly, the MSRB proposes conforming amendments to MSRB Rule G-
8(a)(xvi)(H) and (I) to require dealers to maintain records of the 
supplemental information related to bond ballot campaign contributions 
that are required to be disclosed on Form G-37 under the proposed rule 
change.

III. Summary of Comments Received and the MSRB's Response

    As previously noted, the Commission received four comment letters 
on the proposed rule change and a response from the MSRB.\7\ Two 
commenters expressed general support for the proposed rule change.\8\ 
One commenter found the proposed disclosure requirements to be 
inadequate.\9\ One commenter addressed state law matters, which are not 
the subject of the proposed rule change.\10\
---------------------------------------------------------------------------

    \7\ See supra notes 4 and 5.
    \8\ See Sunlight Letter and AGFS Letter.
    \9\ See NAIPFA Letter.
    \10\ See AG Letter. Because the AG Letter relates to subject 
matters not directly relevant to the proposed rule change, the 
Commission does not address the comment herein.
---------------------------------------------------------------------------

A. General Support to the Proposed Rule Change

    One commenter noted that the proposed rule change is necessary in 
order to gather information for evaluation of potential further actions 
in response to circumstances suggesting corruption and unfair dealing 
in gaining employment and participating in municipal securities 
issuances approved by voters.\11\ Another commenter stated that 
improving ``public disclosure of bond ballot campaign contributions is 
fundamental to helping citizens be better informed about possible 
conflicts of interest and any ``pay-to-play'' schemes that might be 
occurring in the underwriting of bonds.'' \12\
---------------------------------------------------------------------------

    \11\ See AGFS Letter.
    \12\ See Sunlight Letter.
---------------------------------------------------------------------------

B. Disclosure Requirements are Inadequate

    One commenter also requested that the MSRB ``further improve 
transparency and accountability by making municipal securities 
information available in an open, standardized format and by using non-
proprietary unique identifiers.'' \13\ In response, the MSRB stated 
that none of these requests were the subject of the proposed rule 
change but that the MSRB will keep these requests under advisement as 
it considers future enhancements to its political contribution 
transparency initiatives.
---------------------------------------------------------------------------

    \13\ Id.
---------------------------------------------------------------------------

    Another commenter stated that the proposed disclosure requirements 
are inadequate to curtail actual or perceived quid pro quo practices 
with respect to bond ballot campaign contributions.\14\ Moreover, this 
commenter noted that the MSRB's First Amendment concerns are 
unwarranted in light of the Supreme Court's decision in Citizens United 
v. FEC.\15\ This commenter suggested that additional steps beyond 
disclosure requirements are necessary to address the issue, either by 
way of a direct contribution ban, or an indirect expenditure limit.\16\ 
``Contributions to bond ballot campaign committees are, in fact, direct 
in nature and, because of the evidence of actual or perceived quid pro 
quo, such contributions should be prohibited in order to prevent quid 
pro quo from continuing to occur.'' \17\ If bond ballot campaign 
committee contributions are determined to be indirect expenditures, 
this commenter urged the Commission to place limits on such 
expenditures as a result of past and ongoing quid pro quo. This 
commenter also suggested that bond ballot campaign committee 
contributions be limited to $200 per election and be combined with a 
ban on business in the event such contributions exceed this amount. 
Furthermore, the commenter suggested that, if the above-referenced 
recommendations are not implemented, the proposed rule change should be 
amended to require disclosure of contributions contemporaneously or 
within a reasonable amount of time after the contribution is made. The 
commenter argued that the current proposed quarterly disclosure 
timetable is insufficient to curtail the actual or perceived quid pro 
quo, because ``in all likelihood, an election will have concluded long 
before the disclosures are ever made, which will diminish whatever 
informative value such disclosures may have to the voting public.''
---------------------------------------------------------------------------

    \14\ See NAIPFA Letter.
    \15\ 558 U.S. 310 (2010).
    \16\ Id.
    \17\ Id.
---------------------------------------------------------------------------

    In response, the MSRB noted it has previously acknowledged and 
responded to similar comments, including those received pursuant to a 
request for comment to the public,\18\ which were specifically 
addressed in the Notice. In addition, the MSRB reiterated that approval 
of the proposed rule change does not foreclose additional rulemaking in 
the future.
---------------------------------------------------------------------------

    \18\ See MSRB Notice 2012-43 (August 15, 2012).
---------------------------------------------------------------------------

IV. Discussion and Commission Findings

    The Commission has carefully considered the proposed rule change, 
as well as the comment letters received and the MSRB's response, and 
finds that the proposed rule change is consistent with the requirements 
of the Act and the rules and regulations thereunder applicable to the 
MSRB. \19\ In particular, the proposed rule change is consistent with 
Section 15B(b)(2)(C) of the Act, which provides that the MSRB's rules 
shall be designed to prevent fraudulent

[[Page 20158]]

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 and municipal financial products, to remove impediments to 
and perfect the mechanism of a free and open market in municipal 
securities and municipal financial products, and, in general, to 
protect investors, municipal entities, obligated persons, and the 
public interest.\20\
---------------------------------------------------------------------------

    \19\ In approving the proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \20\ 15 U.S.C. 78o-4(b)(2)(C).
---------------------------------------------------------------------------

    The proposed rule change is consistent with Section 15B(b)(2)(C) of 
the Act, because it is intended to protect investors and the public 
interest and prevent fraudulent and manipulative acts and practices by 
adding greater specificity to the public disclosures required for 
contributions made by covered parties to bond ballot campaigns and any 
municipal securities business awarded pursuant to such bond ballot 
measure. Market participants will have access to such public 
information in a centralized format on the MSRB's Web site through Form 
G-37, which will increase market transparency and strengthen market 
integrity of the municipal securities market. The information will help 
shed light on ongoing market concerns of pay-to-play practices with 
respect to bond ballot campaign contributions. The MSRB has also 
represented that the revisions to MSRB Rule G-37 will assist the MSRB 
in its continuing review of MSRB Rule G-37 and whether any additional 
disclosure requirements are desirable to address other practices that 
may present challenges to the integrity of the municipal securities 
market related to political contributions by dealers and dealer 
personnel. Furthermore, the MSRB has noted that approval of the 
proposed rule change does not foreclose additional rulemaking in the 
future. For these reasons, the Commission believes that the proposed 
rule change is consistent with the Act.

V. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to the MSRB, and in 
particular, Section 15B(b)(2)(C) of the Act. The proposal will become 
effective no later than the start of the second calendar quarter 
following the date of this order.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\21\ that the proposed rule change (SR-MSRB-2013-01) be, and hereby 
is, approved.
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    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-07711 Filed 4-2-13; 8:45 am]
BILLING CODE 8011-01-P
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