Securities Exchange Act Rule 15c2-12(b)(3) provides, in part, that a participating underwriter shall contract with an issuer of municipal securities or its designated agent to receive copies of a final official statement within seven business days after any final agreement to purchase, offer, or sell the municipal securities (the "sale date") in a primary offering subject to the Rule¹. In 1997, the Board published a notice seeking comment on the experiences of brokers, dealers and municipal securities dealers ("dealers") in obtaining compliance by issuers with this contractual obligation². The notice also asked for information on the effect that issuer non-compliance with this contractual obligation may have on dealers’ ability to comply with their own official statement delivery obligations under rules G-36³ and G-32⁴.

        In response to the Board’s notice, some commentators argued that it was unfair that underwriters might face violation of rule G-36 for failure to send official statements to the Board on a timely basis if issuers have failed to fulfill their contractual delivery obligation. Commentators suggested that the Board eliminate the 10 business day outside limit under rule G-36(b)(i), instead making the timing of the underwriter’s submission obligation entirely contingent upon receipt of the official statement from the issuer. Another commentator noted that it frequently did not receive the official statement from the issuer in time for re-delivery to its customers by settlement as required under rule G-32.

        With respect to rule G-36 compliance for offerings subject to Rule 15c2-12, the Board notes that it had originally instituted the 10 business day outside time frame to provide underwriters with a three business day cushion after the date by which issuers are required to have delivered official statements to them pursuant to their Rule 15c2-12 contractual obligations⁵. In recognition of the possibility that an underwriter may sometimes be forced into a potential violation of rule G-36 as a result of the failure by an issuer to deliver an official statement to the underwriter in a timely manner, the Securities and Exchange Commission (the "Commission") stated in its order approving rule G-36:

In proposing rule G-36, the MSRB stated that "[it] believes that dealers should not be subject to a rule violation for something outside of their control; however, it is important that issuers and underwriters do everything possible to ensure that the issuer is able to comply with its contractual requirement to provide final OSs in a timely fashion." Accordingly, the Commission expects that those SROs charged with enforcing rule G-36 will take into consideration whether the underwriter has taken adequate steps to meet the time frame in rule G-36. At the same time, however, the Commission believes that the delivery timeframes of rule G-36 are sufficient and that, if anything, they should result in greater cooperation between underwriters and issuers to ensure that disclosure documents are disseminated in a timely manner⁶.

However, the lack of data to document the timing of official statement receipts and submissions by issuers and underwriters made it difficult to determine whether a significant portion of underwriters’ violations of rule G-36 were being caused by issuer failures to deliver official statements to underwriters in a timely manner.

        With respect to rule G-32 compliance, the Board has previously emphasized the importance of ensuring that official statements are delivered to new issue customers by settlement. The Board has stated that, for those offerings in which an official statement is being prepared, a dealer would violate rule G-32 by settling a customer transaction without delivery of the official statement in final form, even if a preliminary official statement is delivered by settlement and the official statement in final form is delivered to the customer as soon as it becomes available⁷. The Board understands that, for new issue securities, dealers typically seek, and customers generally expect, to settle transactions on the same day as the closing of the underwriting. The Board also is aware that dealers may be exposed to market risks and other financial hardships if they must delay customer settlements until after the bond closing date because the official statement was not made available in time for delivery to customers.

        In order to quantify the degree to which dealer difficulties in complying with rules G-36 and G-32 may result from issuer failures to deliver official statements to underwriters in a timely manner, the Board revised Form G-36(OS) for use in connection with all primary offerings subject to rule G-36 sold on or after January 1, 1998. Among the new data elements added to revised Form G-36(OS) were (i) the date on which the official statement is received by the underwriter from the issuer; (ii) the date on which the underwriter sends the official statement to the Board; and (iii) the closing date for the underwriting⁸. With the information provided through the revised form, the Board felt that it would be in a better position to determine the level of issuer compliance with the contractual obligation to deliver official statements arising under Rule 15c2-12 and to assess the ability of dealers to comply with the official statement delivery requirements under rules G-36 and G-32.

        The Board reviewed certain information included by underwriters on nearly 14,000 Forms G-36(OS) submitted to the Board’s Municipal Securities Information Library^® (or MSIL^®)⁹system in 1998¹⁰. For offerings subject to Rule 15c2-12 (constituting approximately 11,300 of the submissions), the Board focused on whether issuers were reported to have delivered official statements to underwriters within the time frame established under Rule 15c2-12 and in sufficient time for underwriters to meet the time frame established under rule G-36(b)(i). For offerings that were exempt from Rule 15c2-12 but still subject to rule G-36 (approximately 2,000 submissions), the Board reviewed whether issuers were reported to have delivered official statements to underwriters in sufficient time for underwriters to meet the time frame established under rule G-36(c)(i). In addition, for all primary offerings, the Board noted the relationship among the reported sale date, the reported date of issuer delivery of the official statement and the reported date of closing to assess the ability of dealers to deliver official statements to customers by the closing on the underwriting.

        Compliance with Rule G-36(b)(i). The Board found that almost one-fifth (approximately 19%) of all final official statements prepared by issuers of municipal securities sold in primary offerings subject to the Rule 15c2-12 contractual delivery obligation were reported to have been delivered to the underwriters more than seven business days after the sale date, in apparent violation of this contractual obligation. However, as noted above, the Board had instituted the 10 business day requirement in rule G-36(b)(i) to provide underwriters with a three business day cushion. The Board found that approximately 97% of the official statements for these offerings were reported to have been delivered by issuers to underwriters within this expanded 10 business day time frame. Thus, nearly 3% of all official statements for primary offerings subject to Rule 15c2-12 were delivered by issuers to underwriters too late to permit underwriters to comply with rule G-36(b)(i). These late issuer deliveries constituted approximately 30% of all underwriter failures to meet the time frame in rule G-36(b)(i)¹¹.

        The Board believes that there is significant room for improvement with respect to issuer compliance with the contractual obligation to deliver the official statement within seven business days of the sale date. Issuers should take seriously any contract in which they enter, and concerns may be raised if issuers establish a pattern of not complying with their contractual obligations entered into under Rule 15c2-12(b)(3). As noted in the Rule G-36 Approval Order, underwriters should have procedures in place to ensure that they take adequate steps in order to comply with rule G-36. Such steps might include, but are not limited to, communicating clearly with the issuer regarding the underwriter’s need to meet the time frame of rule G-36(b)(i) and providing such assistance to the issuer and its agents in completing the official statement in a timely manner as is reasonable under the circumstances. The Board believes that improved issuer compliance with the contractual requirement to deliver official statements to underwriters within seven business days of the sale date would result in improved underwriter compliance with rule G-36(b)(i).

        Although underwriters reported that, for 3% of the official statements produced for offerings subject to Rule 15c2-12, they could not comply with the 10 business day time frame solely because of issuer delivery delays, the Board has determined not to propose the elimination of this time frame pending improved issuer performance. The Board believes that underwriters that have established adequate procedures for ensuring compliance with rule G-36 and have followed those procedures in instances where official statements have nonetheless been delivered by issuers too late to permit compliance with rule G-36(b)(i) should be able to demonstrate to the enforcement agencies that they have taken adequate steps to meet the time frame in rule G-36, as stated by the Commission in the Rule G-36 Approval Order.

        In addition, the Board believes that there is significant room for improvement with respect to underwriter compliance with the requirement that the official statement be sent to the Board within one business day of receipt from the issuer. Underwriters experiencing problems in this area should review their internal procedures for ensuring that official statements delivered by issuers are handled in a manner that permits the accurate completion of Form G-36(OS) and the prompt sending of such form and the official statement to the Board.

        Compliance with Rule G-36(c)(i) and Draft Amendment to Rule G-36(c)(i). For primary offerings that were not subject to Rule 15c2-12 but were nevertheless subject to the requirement in rule G-36(c)(i) that underwriters send the official statement to the Board by one business day after the bond closing, the Board found that 96% of such official statements were reported to have been delivered by issuers to underwriters within one business day after closing. The 4% of official statement deliveries by issuers to underwriters that were reported as being made more than one business day after closing and therefore too late to permit underwriters to comply with rule G-36(c)(i) constituted more than half (approximately 54%) of all underwriter failures to meet the time frame of that section.

        The Board believes that there is significant room for improvement with respect to underwriter compliance with rule G-36(c)(i) in those situations in which the official statement is received in sufficient time to send to the Board on a timely basis. Underwriters experiencing problems in this area should review their internal procedures for ensuring that official statements delivered by issuers are handled in a manner that permits the accurate completion of Form G-36(OS) and the prompt sending of such form and the official statement to the Board.

        However, the Board is concerned that more than half of the instances in which underwriters have not met the time frame of rule G-36(c)(i) resulted from official statements that were reported to have been delivered by issuers more than one business day after closing. Of course, the Board has no authority to require that an issuer prepare an official statement or that any official statement that is prepared be delivered to underwriters within a specified time frame. In addition, the Commission excepted those primary offerings that are subject to rule G-36(c)(i) from Rule 15c2-12 and therefore no regulatory framework exists to compel, directly or indirectly, the preparation and delivery of an official statement in such offerings. Nonetheless, underwriters should have procedures in place to ensure that they take adequate steps in order to comply with rule G-36 in those cases where the issuer is in fact preparing an official statement. Such steps might include, but are not limited to, communicating clearly with the issuer regarding the underwriter’s need to meet the time frame of rule G-36(c)(i) and providing such assistance to the issuer and its agents in completing the official statement in a timely manner as is reasonable under the circumstances.

        The Board notes that in approximately 36% of the offerings subject to rule G-36(c)(i), the number of business days between the sale date and the business day following closing is less than ten. As a result, for these offerings, the requirement in rule G-36(c)(i) that the underwriter send the official statement to the Board within one business day after the bond closing provides the underwriter with less time to comply with its official statement submission requirement than the 10 business day outside time frame of rule G-36(b)(i), if such time frame were made applicable to these offerings. At the same time, however, issuers in these offerings have not contracted with underwriters to deliver official statements within seven business days since such offerings are exempt from Rule 15c2-12. Thus, in more than one-third of all offerings subject to rule G-36(c)(i), underwriters are required to act more quickly than they would under rule G-36(b)(i) even though there is no concomitant obligation on the part of issuers to deliver an official statement within any particular time frame.

        As a result, the Board is publishing for comment a draft amendment to rule G-36(c)(i) which the Board believes will address this situation. As amended, the rule would provide that an underwriter in a primary offering subject to rule G-36(c)(i) for which an official statement is prepared by the issuer must send two copies of the official statement, together with two copies of Form G-36(OS), to the Board by the later of (i) one business day after the bond closing or (ii) one business day after receipt of the official statement from the issuer. The rule currently requires that the official statement be sent by the business day after the bond closing, regardless of whether the underwriter has in fact received the official statement by such day. This draft amendment is intended solely to provide relief to underwriters that face violation of rule G-36(c)(i) as a result of circumstances beyond their control and is not intended to imply that underwriters and other dealers may ignore their continuing obligation to deliver official statements for new issue municipal securities to customers by settlement, to the extent required under rule G-32.

        Compliance with Rule G-32. The review of Form G-36(OS) submissions also produced indirect evidence of the ability of dealers to comply with their obligation to deliver official statements to customers in a timely manner under rule G-32¹². The Board found that over 1,000 official statements (constituting 7.6% of all official statements received by the MSIL^® system in 1998) were reported as being delivered by issuers to underwriters after closing, thereby making impossible the settlement by dealers with their customers on the closing date of the underwriting without running afoul of the requirement that official statements be delivered to customers by settlement¹³. The Board is quite concerned that so many official statements are being delivered to underwriters after closing. The Board believes that any protection from liability that an issuer or a dealer may receive from the disclosures made in an official statement could well be squandered if the disclosures are in fact made after a transaction – whether the underwriting or the customer trade – has settled. Of course, the Board does not have the authority to regulate the timing or content of the official statement.

        Even though approximately 92% of official statements were delivered by issuers to underwriters by closing, the Board notes that delivery on the closing date does not, in the vast majority of cases, provide dealers with sufficient time to re-deliver official statements to customers if they are to settle with them on the closing date. For example, the Board has previously stated that the sending by a dealer to its customer of an official statement by mail three business days prior to settlement with the customer will presumptively satisfy the rule G-32 delivery obligation¹⁴. Thus, a dealer that receives the official statement three or more business days prior to settlement with the issuer may be well-positioned to comply with rule G-32¹⁵. However, the Board found that only 70% of official statements were reported to have been delivered by issuers to underwriters three or more business days prior to closing. Thus, with respect to 30% (or approximately 4,000) of all official statements, dealers were unable to rely on the mailing presumption and therefore were required to ensure actual delivery by settlement using such other means as may have been available (e.g., personal delivery, over-night delivery service, courier service, etc.) in order to avoid a rule G-32 violation¹⁶. Furthermore, a dealer that is not a syndicate member may require additional time to receive its copy of the official statement from the syndicate or from the other dealer from which the selling dealer acquired the security¹⁷.

        The Board observed a direct correlation between the length of time from sale date to closing date (the "Bond Delivery Period") and the timing of issuer deliveries of official statements to underwriters prior to closing. In the case of an offering subject to Rule 15c2-12 having a Bond Delivery Period of 10 business days (i.e., 10 business days, or two full calendar weeks, between the sale date and the closing date), the issuer could deliver the official statement to the underwriter by the seventh business day after the sale date in conformity with its contractual obligation arising under Rule 15c2-12(b)(3) and dealers may still have three business days to mail the official statement to their customers for settlements timed to occur on the closing date, in reliance on the three business day mailing presumption under rule G-32. The Board found that only 76%, or barely three out of four, of the official statements for such offerings were reported to have been delivered by issuers to underwriters within the seven business day time frame and in enough time for dealers to attempt to rely on the rule G-32 mailing presumption.

        To the extent that the Bond Delivery Period is compressed to less than 10 business days, either the issuer must deliver the official statement to the underwriter in less than seven business days in order to preserve for dealers the possibility of using the rule G-32 mailing presumption or dealers must find alternate (and, in many cases, considerably more expensive) means of assuring actual delivery of the official statement to their customers by settlement. For example, for offerings in which the Bond Delivery Period was only nine business days, issuers were reported to have delivered official statements to the underwriters at least three business days prior to closing in only 60% of the cases. Further compression of the Bond Delivery Period resulted in increasingly lower levels of deliveries within the desired time frame, from 45% of deliveries made three or more business days prior to closing for offerings with a Bond Delivery Period of eight business days to 21% of deliveries made three or more business days prior to closing for offerings with a Bond Delivery Period of five business days, or one full calendar week.

        Conversely, the Board found that extending the Bond Delivery Period resulted in significantly improved timing of official statement deliveries. For example, for offerings in which the Bond Delivery Period was increased by one day to 11 business days, issuers were reported to have delivered official statements to the underwriters at least three business days prior to closing in 84% of the cases. This figure increased as the Bond Delivery Period was extended, with 95% of official statements delivered within this time frame for offerings having a Bond Delivery Period of 13 business days and fully 99% of official statements delivered within this time frame for offerings having a Bond Delivery Period of 15 business days, or three full calendar weeks.

        In view of these statistics, the Board urges issuers, when scheduling the sale and closing dates of their underwritings, to consider carefully the nature of the various tasks that must be undertaken and completed in the process of moving an underwriting from sale to closing. In particular, the Board believes that an issuer should establish a financing schedule that provides all parties with adequate time and opportunity to fully and professionally complete their assigned tasks. The Board believes that the interests of issuers, underwriters and other financing participants are best served if the full expertise represented by the participants can be brought to bear on the financing in a considered and deliberative manner. Furthermore, the Board believes that the participants’ interests with regard to the federal securities laws (including the anti-fraud provisions) – not to mention the interests of investors – are best served if the official statement is provided to customers by settlement of their transactions.

        Issuers are reminded that the Commission crafted Rule 15c2-12(b)(3) with the aim of assuring that official statements be delivered to underwriters both within a specified number of days (i.e., seven business days after the sale date) and in time to permit dealers to deliver them to customers. Thus, Rule 15c2-12(b)(3) not only requires that the contractual obligation between issuers and underwriters provide for delivery of the official statement within seven business days of the sale date but also that delivery be made in sufficient time to accompany any confirmation that requests payment from any customer. In approving Rule 15c2-12, the Commission stated that "[b]y adopting paragraph (b)(3), which serves as a foundation for fostering compliance with the requirements of MSRB rule G-32, the Commission wishes to emphasize the importance it places on the prompt distribution of final official statements."¹⁸ As stated previously, the Board believes that issuers should take seriously any contract in which they enter. Furthermore, concerns may be raised if issuers establish a pattern of not complying with their contractual obligations entered into under Rule 15c2-12(b)(3). If issuers were to at least partially meet their contractual obligation by delivering official statements to the underwriters within seven business days of the sale date (even if not delivered in sufficient time to accompany final money confirmations) while giving due weight to the amount of time needed by all financing participants to properly fulfill their duties, the Board believes that a significant portion of the rule G-32 compliance problems could be eliminated.

        The Board will continue to monitor the performance of issuers and dealers in connection with timely delivery of official statements. Although the Board believes that the interests of all parties concerned are best served by delivery of the official statement to customers by settlement, the Board may be compelled to review the structure of its dealer disclosure requirements if it continues to observe significant impediments to dealer compliance with such requirements resulting from causes beyond the control of dealers.

        The Board invites comment on whether, given the existing statutory limits on mandating preparation and delivery of disclosure materials by issuers of municipal securities,¹⁹ any alternative disclosure dissemination systems could provide for more efficient and timely delivery of disclosure materials to customers in the municipal securities market. For example, the Board could provide an exemption from the existing requirement under rule G-32 that dealers deliver final official statements to customers purchasing new issue municipal securities by settlement if two conditions are met: (1) preliminary official statements are delivered to customers by the time they make their investment decisions and (2) customers are provided information prior to or simultaneously with receiving any confirmation requesting payment as to where they may acquire final official statements free of charge by settlement of their transactions.²⁰ The Board notes that such a revised disclosure system would not mandate delivery of a preliminary official statement²¹ but merely provide that an exception from the existing delivery requirement under rule G-32 with respect to the official statement in final form for any particular customer would be conditioned on the delivery of a preliminary official statement in a timely manner and the availability of the final official statement. The Board also would be interested in any other suggestions for an alternative system that might achieve the stated goal of more efficient and more timely disclosure than the current rule G-32 procedure.

Comments from all interested parties are welcome. Comments should be submitted no later than September 30, 1999 and may be directed to Ernesto A. Lanza, Associate General Counsel. Written comments will be available for public inspection.

July 15, 1999

TEXT OF DRAFT AMENDMENTS²²

(a)-(b) No change.

(c) Delivery Requirements for Issues not Subject to Securities Exchange Act Rule 15c2-12.

        (i) Subject to paragraph (iii) below, each broker, dealer, or municipal securities dealer that acts as an underwriter in a primary offering of municipal securities not subject to Securities Exchange Act rule 15c2-12 shall send to the Board or its designee, by certified or registered mail, or some other equally prompt means that provides a record of sending, within by the later of one business day of after delivery of the securities by the issuer to the broker, dealer, or municipal securities dealer or one business day after receipt of the official statement in final form from the issuer or its designated agent, if an official statement in final form is prepared, the following documents and written information: two copies of the official statement in final form, if prepared by or on behalf of the issuer; and, if an official statement in final form is prepared, two copies of completed Form G-36(OS) prescribed by the Board, including the CUSIP number or numbers for the issue.

        (ii) No change.

(d)-(f) No change.

ENDNOTES

1. As described below, paragraph (b)(3) of the Rule also provides for delivery of the final official statement in sufficient time to accompany money confirmations. Primary offerings exempt from this provision consist of offerings of less than $1,000,000 and offerings in authorized denominations of $100,000 or more if the securities (i) are sold to no more than 35 persons with knowledge and experience in financial and business matters, capable of evaluating the merits and risks of the investment and not purchasing for more than one account or with a view to distribution; (ii) have a maturity of nine months or less; or (iii) at the option of the holder may be tendered to the issuer or its agent for redemption or purchase at par value or more at least as frequently as every nine months until maturity, earlier redemption, or purchase by the issuer or its agent.

2. See "Board Review of Underwriting Process," MSRB Reports, Vol. 17, No. 2 (June 1997) at 3-16. The current edition of MSRB Reports and recent back-issues are available from the Board’s Internet website at www.msrb.org.

3.Rule G-36(b)(i) provides that, for primary offerings subject to Rule 15c2-12, underwriters must send the official statement to the Board within one business day of receipt from the issuer, but no later than 10 business days after the sale date. For most primary offerings that are exempt from Rule 15c2-12, rule G-36(c)(i) provides that underwriters must send any official statement prepared for such offering to the Board within one business day after the closing date for the underwriting. Only "limited placement" offerings (as described in Rule 15c2-12(d)(1)(i)) and certain commercial paper issues are wholly exempt from rule G-36. See MSRB Rule Book (July 1, 1999) at 174.

4. Rule G-32(a) provides that, with certain limited exceptions, a dealer may not sell a new issue municipal security to a customer unless it delivers an official statement to thecustomer by no later than the settlement of the transaction. Sales of commercial paper are exempt from rule G-32 and puttable obligations that are exempt from Rule 15c2-12 under subparagraph (d)(1)(iii) thereof ("Exempt VRDOs") may be sold so long as a preliminary official statement is delivered by settlement and an official statement in final form is sent when it becomes available. See MSRB Rule Book (July 1, 1999) at 150.

5. Of course, underwriters also are obligated under rule G-36(b)(i) to send the official statement to the Board within one business day of receipt from the issuer, regardless of whether the issuer has complied with its contractual obligation to deliver the official statement within seven business days of the sale date.

6.Securities Exchange Act Release No. 28081 (June 1, 1990), 55 FR 23333 (the "Rule G-36 Approval Order").

7.See "Disclosure Obligations of Brokers, Dealers and Municipal Securities Dealers in Connection with New Issue Municipal Securities Under Rule G-32," MSRB Reports, Vol. 19, No. 1 (Feb. 1999) at 13-18. The only exceptions are for commercial paper and Exempt VRDOs. See note 4 above.

8. See "Board Review of Underwriting Process," supra, at 5; "Revised Forms G-36 and Amendment to Rule G-8 Filed," MSRB Reports, Vol. 18, No. 1 (Feb. 1998) at 19-24.

9.Municipal Securities Information Library and MSIL are registered trademarks of the Board.

10. The Board reviewed all Forms G-36(OS) for primary offerings having sale dates in 1998 received in acceptable form by the MSIL^â system on or prior to December 31, 1998. Excluded from this review were any Forms G-36(OS) that omitted the sale date, date of receipt by the underwriter of the official statement from the issuer or date that the underwriter sent the official statement to the MSIL^® system. Information provided by underwriters on Form G-36(OS) is not independently verified by the Board but is provided to the appropriate enforcement agency on a regular basis. Underwriters are required to certify that all information contained in each Form G-36(OS) submitted to the MSIL^â system is true and correct. Inaccuracies in the information reported by underwriters on Form G-36(OS) could subject such underwriter to appropriate enforcement action. The figures cited in this notice could be affected by any such inaccuracies.

11. In addition to the 316 cases in which underwriters could not meet the 10 business day time frame as a result of reported late deliveries by issuers, underwriters failed to meet the requirement in rule G-36(b)(i) that they send the official statement to the Board within one business day of receipt from the issuer in approximately 700 cases.

12.Information gathered on Form G-36(OS) cannot provide direct evidence of dealer compliance or non-compliance with rule G-32 since it does not include the date of settlement with customers and the date of official statement delivery to customers. Furthermore, all dealers selling new issue municipal securities to customers, not just the underwriters, must comply with rule G-32.

13. The Board notes that it has previously acted to provide relief under rule G-32 for Exempt VRDOs. See Rule G-32(a)(i)(A) and (B) and note 4 above. See also "Disclosures in Connection with New Issues," MSRB Reports, Vol. 18, No. 2 (Aug. 1998) at 15-17. The Board determined that relief in this area was appropriate because of fundamental structural impediments to delivery of official statements by closing in the market for Exempt VRDOs.

14. See "Disclosure Obligations of Brokers, Dealers and Municipal Securities Dealers in Connection with New Issue Municipal Securities Under Rule G-32," supra, at 14.

15. This assumes that the dealer in fact is able to mail copies of the official statement to its customers three business days prior to settlement. For example, a dealer receiving an official statement on the third business day prior to the bond closing may nonetheless face significant logistical difficulties in mailing copies of the official statement to all of its customers by the close of business on that date for a variety of reasons. Thus, issuers seeking to assure an orderly distribution of their official statements would ideally deliver the official statement to the underwriters more than three business days prior to the bond closing.

16. The Board believes that the availability of delivery of official statements to customers by electronic means may assist some dealers in meeting their obligation under rule G-32, under the appropriate circumstances. See "Electronic Delivery and Receipt of Information by Brokers, Dealers and Municipal Securities Dealers," MSRB Reports, Vol. 19, No. 1 (Feb. 1999) at 3-7.

17.See "Disclosure Obligations of Brokers, Dealers and Municipal Securities Dealers in Connection with New Issue Municipal Securities Under Rule G-32," supra, at 15-17.

18. Securities Exchange Act Release No. 26985 (June 28, 1989), 54 FR 28799. In proposing Rule 15c2-12, the Commission stated that it expected that "the MSRB would amend rule G-32, where appropriate, to modify the standards governing the timeliness of official statement delivery." Securities Exchange Act Release No. 26100 (Sept. 22, 1988), 53 FR 37778. In order to harmonize the provisions of rule G-32 with Rule 15c2-12(b)(3) and in conformity with the intent of the Commission, the Board published a notice requesting comment on a draft amendment to rule G-32 that, among other things, would have required dealers selling new issue municipal securities subject to Rule 15c2-12 to send official statements to customers by the time confirmations are sent requesting payment from customers, provided that dealers must in any event deliver official statements to customers no later than settlement. See "Disclosures in Connection with New Issues: Rule G-32," MSRB Reports, Vol. 16, No. 3 (Sept. 1996) at 19-23. Based on unanimous opposition from commentators, the Board withdrew the draft amendment, noting that many commentators had stated that there are often delays in obtaining the official statement from the issuer. Furthermore, the Board was concerned that this requirement might inadvertently have the effect of delaying the sending of confirmations rather than improving the timing of official statement deliveries. However, the Board also noted that it had been informed by several institutional investors that their experience with receiving official statements by settlement is very unsatisfactory and that they typically received official statements by settlement less than half the time. See "Notice Concerning Draft Amendment to Rule G-32," MSRB Reports, Vol. 17, No. 2 (June 1997) at 23-24.

19. See Section 15B(d) of the Securities Exchange Act of 1934, as amended.

20. In meeting the requirement that the final official statement be available to customers free of charge by settlement, the Board would anticipate, but not require, that official statements be made available in electronic form. For example, dealers could rely on individual issuers making their official statements available in electronic form (e.g., by posting on the issuer’s Internet website), dealers could establish their own electronic libraries in connection with issues they underwrite or trade, or dealers could use one or more existing or new centralized repositories designed to make official statements quickly and easily accessible without charge to investors.

21. However, the Board would expect to retain the existing requirement in rule G-32 that a preliminary official statement, if any, be delivered to customers by settlement in those cases where an official statement in final form will not be prepared.

22.Underlining indicates additions; strikethrough indicates deletions.

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