MSRB Reminds Dealers About Political Contributions Rule

Date: September 11, 2008

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


THE MUNICIPAL SECURITIES RULEMAKING BOARD
REMINDS DEALERS ABOUT POLITICAL CONTRIBUTIONS RULE

Rule G-37 Applies to Issuer Officials Running for Federal Office

Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) reminded municipal securities dealers today about its rule on political contributions and its application to issuer officials running for federal office, including President and Vice President.  The MSRB rule regarding campaign contributions, Rule G-37, prohibits dealers from engaging in municipal securities business with issuers for two years if they make certain contributions to the political campaigns of officials of such issuers. The MSRB created Rule G-37 in 1994 to preserve the integrity of the municipal securities industry by seeking to end the practice of dealers being awarded municipal securities business based on political contributions.

“As election fundraising campaigns head into their final weeks, the MSRB wanted to remind dealers about the application of Rule G-37 to issuer officials running for federal office – an area of the rule which can be overlooked,” said MSRB Chair Frank Chin.  “Our notice to dealers reviews prior guidance in this area and also cautions dealers to consider prior MSRB guidance on indirect rule violations.” 

In the years since the MSRB enacted Rule G-37, it has published several interpretations of the rule as it applies to various situations.  Several of those dealt with issuer officials who are running for federal office.  Today’s notice reminds dealers that, under Rule G-37, any municipal finance professional in the country can contribute up to $250 to an issuer official’s Presidential or Vice Presidential campaign without triggering the ban on municipal securities business with that issuer.  The rule has an exemption from the ban on business for contributions of $250 or less per election to candidates for whom the municipal finance professional is entitled to vote.   Every municipal finance professional in the United States is entitled to vote in the Presidential election.

Today’s notice to dealers also cites prior interpretations of Rule G-37 that address indirect rule violations involving contributions to non-dealer associated political action committees and payments to political parties.  These interpretations underscore the requirement in Rule G-37 that dealers cannot indirectly do what they are prohibited from doing directly.

To view MSRB’s today’s notice to dealers on Rule G-37, click here.  To read Rule G-37 click here.


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.