MSRB NOTICE 2006-14 (MAY 25, 2006)

Amendment Filed to Rule A-11, on Indemnification of Members and Employees

On May 25, 2006, the MSRB filed with the Securities and Exchange Commission (“SEC”) an amendment to Rule A-11, on indemnification of members and employees, to delete the entire rule language.[1]  Rule A-11 states that each member and employee of the MSRB shall be indemnified and held harmless against all liabilities and related expenses incurred in connection with the performance of his or her official duties, provided that such member or employee has acted, or omitted to act, in good faith and within the scope of his or her authority.  The MSRB recently approved expanding the indemnification provisions for Board members and employees.  Because the language of the expanded provisions was broader than the indemnification provided under Virginia law, where the MSRB is incorporated as a nonstock corporation, the expanded provisions needed to be included in the MSRB’s Articles of Incorporation in order to be effective.  The SEC recently approved a proposed rule change consisting of the MSRB’s Restated Articles of Incorporation and By-Laws, which included the expanded indemnification provisions in the Restated Articles of Incorporation.[2]  Thus, the amendment removes the indemnification provisions from Rule A-11 (and By-Law Article 11).[3]  The amendment became effective upon filing.

May 25, 2006

TEXT OF AMENDMENT[4]

Rule A-11. [Indemnification of Members and Employees]

[Each member and employee of the Board shall be indemnified and held harmless against all liabilities and related expenses incurred in connection with the performance of his or her official duties, provided that such member or employee has acted, or omitted to act, in good faith and within the scope of his or her authority.]

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