MSRB Publishes Interpretations on Payments to Non-Political Accounts

Date: September 25, 2007

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

MSRB Publishes Interpretation on Payments to Non-Political Accounts of Political Organizations Under Rule G-37

Alexandria , VA - Today, the Municipal Securities Rulemaking Board ("MSRB") published an interpretive letter relating to its Rule G-37, on political contributions and prohibitions on municipal securities business.  Rule G-37 was originally adopted by the MSRB in 1994 in an effort to remove the real or perceived conflict of interest present when municipal securities broker-dealers make political contributions to issuer officials and then are awarded municipal securities business by such officials.  The interpretive letter provides guidance with respect to payments to housekeeping, conference or overhead accounts ("non-political accounts") of political committees, political parties, political action committees and other political entities or committees within the meaning of Section 527 of the Internal Revenue Code ("political organizations").  The letter emphasizes that broker-dealers must adopt and enforce written supervisory procedures with respect to payments to non-political accounts of political organizations reasonably designed to ensure that such payments are not used to indirectly circumvent the other provisions of Rule G-37 that would be triggered by a direct contribution to an issuer official.  The letter further notes that not all payments to political organizations that make contributions to issuer officials will necessarily trigger the ban on municipal securities business under Rule G-37 but that appropriate supervisory procedures with respect to any such payments must be adopted and enforced by the broker-dealer.

A copy of a notice that includes the text of the interpretive letter is attached and will soon be available at the MSRB's web site at


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.