MSRB NOTICE 2004-33 (OCTOBER 12, 2004)

CORRECTION TO MSRB NOTICE 2004-32 REQUESTING COMMENTS ON REVISED DRAFT AMENDMENTS TO RULE G-38 RELATING TO SOLICITATION OF MUNICIPAL SECURITIES BUSINESS

On September 29, 2004, the Municipal Securities Rulemaking Board (“MSRB”) published a notice requesting comments on revised draft amendments to Rule G-38 relating to solicitation of municipal securities business (the “September Notice”).[1]  In connection with the draft amendments to Rule G-38, certain related amendments to Rule G-37, on political contributions and prohibitions on municipal securities business, were also proposed.  This notice corrects an omission in the draft amendments to Rule G-37 appearing in the September Notice.

It has come to the MSRB’s attention that the definition of “solicitor MFP” contained in section (g)(ix) of the draft amendments to Rule G-37 omitted language necessary to fully describe those persons intended to be included within such definition.  The term “solicitor MFP” was introduced in the draft amendments to Rule G-37 to assist in more clearly setting forth the fact that, under the draft amendments to Rules G-37 and G-38, independent solicitors of a dealer, as well as solicitor personnel of any independent solicitors that are entities, would be considered municipal finance professionals of the dealer.  However, the language used in the September Notice inadvertently omitted to include as solicitor MFPs those individuals who are already associated persons of a dealer (but who are not partners, directors, officers or employees of the dealer) who also solicit municipal securities business for the dealer but do not receive payment specifically for such solicitation.[2]  Such individuals currently are considered municipal finance professionals for purposes of existing Rule G-37 and the September Notice did not intend to omit such individuals from the definition of solicitor MFP.

The language of that provision is modified to read as follows:[3]

* * * * *

Rule G-37.  Political Contributions and Prohibitions on Municipal Securities Business

(a)-(f) No additional changes.

(g) Definitions.

(i)-(viii) No additional changes.

(ix) The term “solicitor MFP” of a broker, dealer or municipal securities dealer means:

(A)-(B) No additional changes.

(C) any individual who is a partner, director, officer, or employee or other associated person (not otherwise described in clause (A) or (B) of this paragraph) of the broker, dealer or municipal securities dealer and who solicits municipal securities business.

(x) No additional changes.

(h)-(j) No additional changes.

* * * * *

In order to avoid further confusion, the MSRB is modifying the September Notice to read as provided above.  The September Notice remains unchanged in all other respects.  The September Notice, as modified, is available at [click here to access MSRB Notice 2004-32 (September 29, 2004)].  Comments on the modified September Notice should be submitted no later than December 15, 2004.

October 12, 2004



[1] See MSRB Notice 2004-32, available at [click here to access MSRB Notice 2004-32].  All terms used herein are as defined in the September Notice.

[2] For example, Rule G-37 currently considers the president of a bank or other company affiliated with a dealer who solicits municipal securities business on behalf of the dealer to be a municipal finance professional of the dealer, regardless of whether such individual receives payment for such solicitation.

[3] Underlining indicates additions to the language contained in the September Notice; strikethrough indicates deletions from the language contained in September Notice.  In addition, the description of this provision in the second bullet appearing in the text of the September Notice under the heading “SUMMARY OF REVISED DRAFT AMENDMENTS – Summary of Revised Draft Amendments to Rule G-37 and Forms G-37/G-38 and G-37x” is modified to read as follows:

          create a new definition of solicitor MFP, consisting of independent solicitors, any solicitor personnel of an independent solicitor that is an entity, and any partner, director, officer, or employee or other associated person of the dealer who solicits municipal securities business.