MSRB Issues Statement in Response to the SEC's Decision in the Sisung Matter

Date: November 5, 2007

Contact:         Lynnette Kelly Hotchkiss, Executive Director 
                     (703) 797-6600 



Alexandria, VA - We have read with interest the SEC's decision In the Matter of the Applications of SISUNG SECURITIES CORPORATION and LAWRENCE J. SISUNG, JR. involving Rule G-37 on political contributions and prohibitions on municipal securities business. In reaching its conclusions, the SEC applied the rule to the facts presented in this case. As the SEC stated, "Rule G-37 serves a compelling government interest  and is essential to diminish pay-to-play practices in the municipal securities market."

The SEC asks that the MSRB consider whether it may be appropriate to amend the rule, recognizing that the MSRB must be mindful, in considering any amendment to the rule, to consider constitutional limitations. "We would be pleased to consider whether an amendment to Rule G-37 " including an amendment to the definition of issuer official " may be necessary and appropriate." The Board will take up this matter in the near future.

The MSRB's statutory mandate is to protect investors and the public interest in connection with dealer activities in the municipal securities market.  The municipal securities market is one of the world's leading securities markets, and maintaining the integrity of this market is of the utmost importance to the MSRB.  "Pay-to play" harms the integrity of the underwriter selection process, and the market in general. "The MSRB adopted Rule G-37 in 1994 to protect investors and the public interest by ensuring that the high standards and integrity of the municipal securities industry are maintained." We believe that the rule has been very successful in severing the connection between the making of political contributions and the awarding of municipal securities business, thereby removing conflicts - real or perceived - and fostering the integrity of the market. "The rule was drafted with respect for the Constitutional rights of individuals to participate fully in the political process." Similarly, all amendments to Rule G-37 have and will continue to take into account the Constitutional constraints that must be observed.

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.