SEC Approves Mandatory Disclosure of Bond Ballot Contributions By Municipal Dealers

Date: January 22, 2010

Contact:           Jennifer A. Galloway, Chief Communications Officer
                       (703) 797-6600


Alexandria , VA The Securities and Exchange Commission (SEC) has approved an amendment proposed by the Municipal Securities Rulemaking Board (MSRB) to its political contributions rule to require municipal securities broker-dealers and banks to publicly disclose contributions made in support of bond ballot initiatives.  The change will provide for free public access to disclosure of bond ballot contributions through the MSRB’s website.  The requirement is effective February 1, 2010.

“We are very pleased the SEC has approved this amendment, which strengthens the integrity and transparency of the municipal securities market,” said MSRB Executive Director Lynnette Kelly Hotchkiss. “Including disclosure of bond ballot contributions by municipal securities firms in the MSRB’s existing pay-to-play rules will enhance the goal of minimizing even the appearance of improper relationships between municipal securities professionals and government officials.”

Bond ballot measure campaigns typically occur as a result of a state or local government placing a ballot measure before voters to approve specified municipal borrowing. Many state and local jurisdictions are required to authorize the issuance of municipal bonds through voter approval to fund municipal finance projects.

The MSRB’s existing pay-to-play rule, known as Rule G-37, has been the primary means of seeking the elimination of the use of political contributions by dealers to influence the awarding of business in the new-issue municipal securities market.  The rule has served as a model for other federal and state regulators, public bodies and government officials seeking to eliminate the influence of political contributions on the awarding of public-sector contracts.

The new disclosure requirement for bond ballot contributions will apply to municipal securities broker-dealers and banks, their municipal professionals and political action committees.