MSRB NOTICE 2009-45 (JULY 29, 2009)

AMENDMENTS FILED TO ADMINISTRATIVE RULES: RULES A-3, A-4, A-5 AND A-6

On July 29, 2009, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“SEC”) amendments to Rules A-3, on membership on the Board, A-4, on meetings of the Board, A-5, on officers and employees of the Board, and A-6, on committees of the Board.[1]  The rule amendments are concerned solely with the operation and administration of the MSRB and became effective upon filing.

The Board has been reviewing its Administrative Rules and by-laws to ensure that they are consistent with current good corporate governance practices.  Among other things, Rule A-3, on membership of the Board, states that the Board will be composed of 15 members and it describes the types of groups that will be represented on the Board (i.e., public representatives, broker-dealer representatives and bank representatives).  The Board considered the possibility of two persons associated with the same firm being seated on the Board due to a merger, consolidation or similar corporate action of Board members’ firms or other change in circumstances.  The Board decided to add new section (g) to Rule A-3 to prohibit two persons associated with the same firm from serving as members of the Board at the same time.[2]   

Rule A-5, on officers and employees of the Board, among other things, describes the procedure for the election of officers.  Rule A-5(b) notes that vacancies in office shall be filled as soon as practicable by vote of the Board members.  The amendments add language to Rule A-5(b) to provide for an election to fill a vacancy if a Board member elected to a Board office becomes unable to take the position (e.g., by resignation) prior to the commencement of the term. 

The amendments also revise the language in Rules A-3, A-4, on meetings of the Board, A-5 and A-6, on committees of the Board, to ensure gender neutrality by replacing the word “Chairman” with the word “Chair.”

Questions about the amendments may be directed to Lawrence P. Sandor, Associate General Counsel, or Ronald W. Smith, Senior Legal Associate.

July 29, 2009

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TEXT OF AMENDMENTS [3]

 Rule A-3. Membership on the Board

(a) - (b) No change.

(c) Nomination and Election of Members.

(i) – (iii) No change.

(iv) The Nominating Committee shall nominate one person for each of the Board positions to be filled and shall submit the nominees to the Board for approval. In making such nominations, the Nominating Committee shall take into consideration such factors as [to be considered include], without limitation, diversity in the geographic location, size and type of brokers, dealers, and municipal securities dealer represented.  Each nomination shall be accompanied by a statement indicating the position for which such person is nominated, the nominee’s qualifications to serve as a member of the Board, and information concerning the nominee’s association with any broker, dealer, or municipal securities dealer. The names of the nominees will be confidential.

(v) – (vii) No change.

(d) Resignation and Removal of Members.  A member may resign from the Board by submitting a written notice of resignation to the [Chairman] Chair of the Board which shall specify the effective date of such member’s resignation. In no event shall such date be more than 30 days from the date of delivery of such notice to the [Chairman] Chair. If no date is specified, the resignation shall become effective immediately upon its delivery to the [Chairman] Chair.  In the event the Board shall find that any member has willfully violated any provision of the Act, any rule or regulation of the commission thereunder, or any rule of the Board or has abused his or her authority or has otherwise acted, or failed to act, so as to affect adversely the public interest or the best interests of the Board, the Board may, upon the affirmative vote of two-thirds of the whole Board (which shall include the affirmative vote of at least one public representative, one broker-dealer representative and one bank representative), remove such member from office.

(e) - (f) No change.

(g) Affiliations.  Two persons associated with the same broker, dealer or municipal securities dealer shall not serve as members of the Board at the same time.

Rule A-4. Meetings of the Board.

(a) Meetings. Regular meetings of the Board shall be held at least quarterly and at such time and place as from time to time determined by resolution of the Board or provided by rule of the Board.  Special meetings of the Board shall be called by the [Chairman] Chair of the Board or at the written request of not less than three members, which request shall in each case specify the purpose or purposes of the meeting.  At special meetings, the Board shall consider only those specific matters for which the meeting was called, unless all members consent either at the meeting or in writing before or after the meeting to the consideration of other matters.

(b) – (d) No change.

Rule A-5. Officers and Employees of the Board

(a) Officers of the Board.  The officers of the Board shall consist of a [Chairman] Chair and Vice [Chairman] Chair, and such other officers as the Board may deem necessary or appropriate.  The [Chairman] Chair shall preside at meeting of the Board.  During the absence or inability to act of the [Chairman] Chair, or which the office of [Chairman] Chair is vacant, the Vice [Chairman] Chair shall be vested with all of the powers and shall perform all of the duties of the [Chairman] Chair.  In the event of the absence of both the [Chairman] Chair and Vice [Chairman] Chair at any meetings of the Board, the Board may designate one of the members present as acting [Chairman] Chair for the purpose of presiding at such meeting.  The officers of the Board shall have such other powers and perform such other duties as the Board may determine by resolution.

(b) Election of Officers of the Board. Officers of the Board shall be elected annually from among the members, by secret, written ballot of the members, at a meeting of the Board held prior to October 1 of each year according to procedures adopted by the Board. Officers shall serve for a term commencing on the October 1 next following their election and ending with the succeeding September 30; provided, however, that any officer may resign his or her office prior to the expiration of his or her term by filing a written notice of resignation with the Secretary to the Board which shall specify the effective date of such resignation. In no event shall such date be less than 10 days or more than 30 days from the date of filing of such notice. If no date is specified, the resignation shall become effective 10 days from the date of filing. The Board may remove any officer at any time by two-thirds vote of the whole Board. Vacancies in office shall be filled as soon as practicable by vote of the members and any person elected to fill a vacancy shall serve only for the remainder of his or her predecessor’s term. For purposes of this rule, the term “vacancies in office” shall include any vacancy resulting from the resignation of any person duly elected to an office prior to the commencement of his or her term.

(c) – (d) No change.

Rule A-6. Committees of the Board

(a) The Board may establish one or more standing or special committees, each to have an exercise such powers and authority as may be provided by the Board in the resolution establishing such committee; provided, however, that no such committee shall have the authority to exercise any of the powers and authority specifically required to be exercised by the entire Board by the Act or by rule of the Board or other applicable law.  The [Chairman] Chair of the Board shall be an ex officio member of each committee. 

(b) No change.



[1] File No. SR-MSRB-2009-11.  Comments on the amendments should be submitted to the SEC and should reference the file number.   

[2] The amendments also revise the language in Rule A-3(c)(iv) to restore language that was inadvertently deleted from the rule in recent amendments.  See Securities Exchange Act Release No. 57500 (March 14, 2008), 73 FR 15244 (March 21, 2008).  See also File No. SR-MSRB-2008-02.  The revised language now reads as was intended in the previous proposed rule change.

[3] Underlining indicates additions; brackets denote deletions.