MSRB NOTICE 2004-25 (AUGUST 2, 2004)

WITHDRAWAL OF FILING ON MARKETING OF 529 COLLEGE SAVINGS PLANS IN THE WORKPLACE

On April 29, 2003, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) a proposed rule change consisting of an interpretive notice on marketing by brokers, dealers and municipal securities dealers of 529 college savings plans in the workplace.[1]  The proposed interpretive notice provided guidance on the application of Rule G-8, on recordkeeping, Rule G-17, on fair dealing, Rule G-19, on suitability, Rule G-27, on supervision, and Rule G-32, on disclosure, in this context.

Market practices in the mutual fund industry, as well as in the related 529 college savings plan market, have come under increased scrutiny since the filing of the proposed interpretive notice.  Specifically in regard to the 529 college savings plan market, the SEC has proposed new Exchange Act Rule 15c2-2, on confirmation disclosures, and Exchange Act Rule 15c2-3, on point-of-sale disclosures;[2] the National Association of State Treasurers and the College Savings Plan Network approved draft Voluntary Disclosure Principles in connection with the preparation by the state plans of their program disclosure documents;[3] and U.S. Representative Michael G. Oxley has recently requested that the SEC Chairman’s Task Force on College Savings Plans make recommendations regarding certain proposals for regulatory change.[4]

In light of these developments, the SEC has asked the MSRB to withdraw its filing.  The MSRB has today acted upon this request by sending a letter of withdrawal to the SEC.  The MSRB expects to consider at a future meeting whether to republish a revised version of the interpretive notice for further comment.

August 2, 2004


[1] File No. SR-MSRB-2003-03.  The SEC subsequently published the proposed interpretive notice for comment in the Federal Register.  See Exchange Act Release No. 34-47815 (May 8, 2003), 68 FR 25918 (May 14, 2003) (www.sec.gov/rules/sro/msrb/34-47815.pdf).

[2] See Exchange Act Release No. 34-49148 (January 29, 2004), 69 FR 6438 (February 10, 2004) (www.sec.gov/rules/proposed/33-8358.htm).  The comment letter submitted by the MSRB to the SEC is available at www.sec.gov/rules/proposed/s70604/s70604-629.pdf

[3] The current draft of the Voluntary Disclosure Principles is available at www.collegesavings.org/Draft%20Voluntary%20Disclosure%20Principles%206%204%2004.pdf.

[4] Congressman Oxley’s letter to SEC Chairman William H. Donaldson is available at financialservices.house.gov/media/pdf/d2ltr.001.PDF.