Amendment Filed

Technical Amendments Filed

The Board has filed with the SEC a series of technical amendments to rules A-3, A-5, A-7, A-11 through A-15, A-17, D-5, G-1 through G-3, G-5 through G-9, G-11 through G-16, G-18, G-20, G-23, G-27, G-28, G-32, G-34, G-36, G-37 and G-39. The technical amendments become operative on July 1, 1999.

        On May 28, 1999, the Board filed with the Securities and Exchange Commission (the "SEC") a series of technical amendments to rules A-3, A-5, A-7, A-11 Through A-15, A-17, D-5, G-1 Through G-3, G-5 Through G-9, G-11 Through G-16, G-18, G-20, G-23, G-27, G-28, G-32, G-34, G-36, G-37 and G-391. The technical amendments become operative on July 1, 1999.

        The Board adopted the technical amendments for the purpose of making certain non-substantive changes to the affected rules. These changes are designed to:

May 28, 1999

 

Text of Technical Amendments2

Rule A-3 – Membership on the Board

(a) Number and Representation. The Board shall consist of 15 members, at all times equally divided among the following groups:

        (i) Public Representatives. Individuals who are not associated with any broker, dealer, or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker, dealer or municipal securities dealer), at least one of whom shall be representative of investors in municipal securities, and at least one of whom shall be representative of issuers of municipal securities;

        (ii) Broker-Dealer Representatives. Individuals who are associated with and representative of municipal securities brokers, dealers and municipal securities dealers which are not banks or subsidiaries or departments or divisions of banks;

        (iii) No change.

(b) Increase or Decrease in Number. The total number of members of the Board may be increased or decreased from time to time by rule of the Board, but in no event shall the total number of members of the Board be less than 15. Any such increase or decrease shall be in multiples of six so that the total number of members of the Board shall always be an odd number, equally divided among the three groups of representatives enumerated in paragraph section (a) of this rule.

(c) Nomination and Election of Members.

        (i) Members shall be nominated and elected in accordance with the procedures specified by this rule. All members of the Board shall be elected for terms of three years, so that the terms of office of one-third of the whole Board shall expire each year. The terms of office of all members of the Board shall commence on October 1 of the year in which elected and shall terminate on September 30 of the year in which their terms expire. No member of the Board may succeed himself or herself in office and no broker-dealer representative or bank representative may be succeeded in office by any person associated with the municipal securities broker, dealer or municipal securities dealer with which such member was associated at the expiration of his such member’s term.

        (ii) The Board will appoint a Nominating Committee composed of nine members. The membership of the Nominating Committee shall consist of six Board members and three persons who are not members of the Board. Of the six Board members, two shall be associated with and representative of bank dealers bank representatives, two shall be associated with and representative of brokers, dealers, and municipal securities dealers other than bank dealers broker-dealer representatives, and two shall not be associated with any broker, dealer, or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling any broker or dealer which is not a municipal securities broker or municipal securities dealer) public representatives. Of the three non-Board members, one shall be associated with and representative of bank dealers, one shall be associated with and representative of brokers, dealers, and municipal securities dealers other than bank dealers, and one shall not be associated with any broker, dealer, or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling any broker or dealer which is not a municipal securities broker, dealer or municipal securities dealer). In appointing persons to serve on the Nominating Committee, factors to be considered include the need to achieve broad geographic representation on such Committee, as well as diversity in the size and type of brokers, dealers and municipal securities dealers represented on such Committee.

        (iii)-(v) No change.

        (vi) The public representatives on the Board will, prior to their assumption of office, be subject to approval by the Commission to assure that no one of them is associated with any broker, dealer or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker, dealer or municipal securities dealer) and that at least one of the public representatives of the Board is representative of investors in municipal securities and at least one is representative of issuers of municipal securities.

        (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 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. If no date is specified, the resignation shall become effective immediately upon its delivery to the Chairman. 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) Vacancies. Vacancies on the Board shall be filled by vote of the members of the Board, subject to the Commission’s power of approval referred to in paragraph section (c) of this rule with respect to public representatives. Any person so elected to fill a vacancy shall serve for the term, or any unexpired portion of the term, for which such person’s predecessor was elected. For purposes of this rule, the term "vacancies on the Board" shall include any vacancy resulting from the resignation of any person duly elected to the Board prior to the commencement of his or her term.

(f) Compensation and Expenses. Members shall be entitled to an allowance for transportation expenses, to the extent provided by resolution of the Board, from their home to the site of a meeting of the Board and from the site of such meeting to their home, together with a per diem to be set by the Board for those days or fraction thereof on which they attend Board meetings or participate in other designated activities. Members of the Board shall also be entitled to reimbursement for actual and necessary expenses incurred by them in connection with any other official business of the Board. Except as provided in paragraph section (c) of rule A-6, no member of the Board shall be entitled to receive any other compensation from the Board.

 

Rule A-5 – Officers and Employees of the Board

(a) No change.

(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.

(c)-(d) No change.

 

Rule A-7 – Assessments

The Board shall, by rule, provide for the costs and expenses of its operation and administration by levying such fees and charges on municipal securities brokers, dealers and municipal securities dealers as may be determined necessary or appropriate by the Board.

 

Rule A-11 – Indemnification of Members, Employees and Arbitrators

Each member and employee of the Board and each arbitrator selected by the Board under Rule G-35 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, employee or arbitrator has acted, or omitted to act, in good faith and within the scope of his or her authority.

 

 

Rule A-12 – Initial Fee

Prior to effecting any transaction in or inducing or attempting to induce the purchase or sale of any municipal security, a broker, dealer, or municipal securities dealer shall pay to the Board an initial fee of $100, accompanied by a written statement setting forth the name, address and Securities and Exchange Commission registration number of the broker, dealer, or municipal securities dealer on whose behalf such fee is paid. The Commission registration number shall also be set forth on the face of the remittance. Such fee shall be payable at the offices of the Board. in Washington, D.C. In the event any person subject to this rule shall fail to pay the required fee, the Board may recommend to the Commission that the registration of such person with the Commission be suspended or revoked.

 

Rule A-13 – Underwriting and Transaction Assessments for Brokers, Dealers and Municipal Securities Dealers

(a) Underwriting Assessments-Scope. Each broker, dealer and municipal securities dealer shall pay to the Board an underwriting fee as set forth in paragraph section (b) for all municipal securities purchased from an issuer by or through such broker, dealer or municipal securities dealer, whether acting as principal or agent, as part of a primary offering, provided that this rule shall not apply to a primary offering of securities if all such securities in the primary offering:

        (i)-(iv) No change.

If a syndicate or similar account has been formed for the purchase of the securities, the underwriting fee shall be paid by the managing underwriter on behalf of each participant in the syndicate or similar account.

(b)-(e) No change.

 (f) Definitions. (i) For purposes of this rule, the term "primary offering" shall mean an offering of municipal securities directly or indirectly by or on behalf of the issuer of such securities, including any remarketing of such securities directly by or on behalf of the issuer of such securities.

 

Rule A-14 – Annual Fee

In addition to any other fees prescribed by the rules of the Board, each broker, dealer and municipal securities dealer shall pay an annual fee to the Board of $200, with respect to each fiscal year of the Board in which the broker, dealer or municipal securities dealer conducts a municipal securities business activities. Such fee must be received at the office of the Board in Alexandria, Virginia no later than October 31 of the fiscal year for which the fee is paid, accompanied by the invoice sent to the broker, dealer or municipal securities dealer by the Board, or a written statement setting forth the name, address and Commission registration number of the broker, dealer or municipal securities dealer on whose behalf the fee is paid.

 

Rule A-15 – Notification to Board of Termination of Municipal Securities Business Activities and Change of Name or Address

(a) Procedure for Notifying Board of Termination. A broker, dealer, or municipal securities dealer that ceases to be engaged in a municipal securities business activities must promptly notify the Board of such broker’s, dealer’s or municipal securities dealer’s change of status by filing with the Board at its office in Washington, D.C. a written statement setting forth such broker’s, dealer’s or municipal securities dealer’s name, address and Commission registration number and the fact that such broker, dealer or municipal securities dealer is no longer engaging in a municipal securities business activities.

(b) Obligation to Pay Fees. A broker, dealer, or municipal securities dealer that files notification with the Board pursuant to paragraph section (a) of this rule shall be obligated to pay the fees owed to the Board at the time of filing of such notification.

 

Rule A-17 – Confidentiality of Examination Reports

Any report of an examination or of information extracted from a report of an examination ("examination report") of a municipal securities broker, dealer and municipal securities dealer furnished to the Board by the Securities and Exchange Commission pursuant to section 15(B)(c)(7)(B) of the Act and rule 15Bc7-1 thereunder shall be maintained and utilized in accordance with the following terms and conditions, in order to ensure the confidentiality of any information contained in such reports:

        (1) Any such examination report shall be reviewed only by authorized members of the Board’s staff; no member of the Board shall have access, directly or indirectly, to an examination report. Anything herein to the contrary notwithstanding, the staff of the Board may furnish to the Board or any appropriate committee thereof summaries or other communications relating to the examination reports, provided that such summaries or other communications shall not contain information which might make it possible to identify the municipal securities brokers, dealers or municipal securities dealers or associated persons which are the subject of the examination reports to which any such summary or other communication relates.

        (2)-(4) No change.

 

 

Rule D-5 – "Member and Initial Member"

 

The term "member" shall mean a member of the Board. The term "initial member" shall mean a member appointed by the Commission pursuant to the provisions of section 15B(b)(1) of the Act or to fill a vacancy on the Board resulting from the death, resignation or removal of an initial member prior to the expiration of his term of office.

 

Rule G-1 – Separately Identifiable Department or Division of a Bank

(a)-(c) No change.

(d) The fact that the bank’s municipal securities dealer activities are conducted in more than one geographic organizational or operational unit of the bank shall not preclude a finding that the bank has a separately identifiable department or division for purposes of this rule, provided, however, that all such units are identifiable and that the requirements of subparagraphs (1) and (2) of paragraph section (a) of this rule are met with respect to each such unit. All such geographic, organizational or operational units of the bank shall be considered in the aggregate as the separately identifiable department or division of the bank for purposes of this rule.

 

Rule G-2 – Standards of Professional Qualification

No municipal securities broker, dealer or municipal securities dealer shall effect any transaction in, or induce or attempt to induce the purchase or sale of, any municipal security unless such municipal securities broker, dealer or municipal securities dealer and every natural person associated with such municipal securities broker, dealer or municipal securities dealer is qualified in accordance with the rules of the Board.

 

 

Rule G-3 – Classification of Principals and Representatives; Numerical Requirements; Testing; Continuing Education Requirements

No broker, dealer or municipal securities dealer or person who is a municipal securities representative, municipal securities principal, municipal securities sales principal or financial and operations principal (as hereafter defined) shall be qualified for purposes of rule G-2 unless such broker, dealer or municipal securities dealer or person meets the requirements of this rule.

(a)-(c) No change.

(d) Financial and Operations Principal.

        (i) Definition. The term "financial and operations principal" means a natural person associated with a broker, dealer or municipal securities dealer (other than a bank dealer or a broker, dealer or municipal securities dealer meeting the requirements of paragraph (a)(2) or (3) subparagraph (a)(2)(iv), (v) or (vi) of rule 15c3-1 under the Act or exempted from the requirements of rule 15c3-1 in accordance with paragraph (b)(3) thereof), whose duties include:

(A)-(G) No change.

        (ii) No change.

        (iii) Numerical Requirements. Every broker, dealer and municipal securities dealer (other than a bank dealer and a broker, dealer or municipal securities dealer meeting the requirements of paragraph (a)(2) or (3) subparagraph (a)(2)(iv), (v) or (vi) of rule 15c3-1 under the Act or exempted from the requirements of rule 15c3-1 in accordance with paragraph (b)(3) thereof) shall have at least one financial and operations principal, including its chief financial officer, qualified in accordance with paragraph (d)(ii) of this rule.

(e)-(f) No change.

(g) Waiver of Qualification Requirements.

        (i) The requirements of paragraphs (a)(ii), (a)(iii), b(ii) (b)(ii) and (c)(ii) may be waived in extraordinary cases for any associated person of a broker, dealer or municipal securities dealer who demonstrates extensive experience in a field closely related to the municipal securities business activities of such broker, dealer or municipal securities dealer. Such waiver may be granted by

(A)-(B) No change.

        (ii) No change.

(h) No change.

 

 

Rule G-5 – Disciplinary Actions by Appropriate Regulatory Agencies; Remedial Notices by Registered Securities Associations

(a) No municipal securities broker, dealer or municipal securities dealer shall effect any transaction in, or induce or attempt to induce the purchase or sale of, any municipal security in contravention of any effective restrictions imposed upon such municipal securities broker, dealer or municipal securities dealer by the Commission pursuant to sections 15(b)(4) or (5) or 15B(c)(2) or (3) of the Act or by an appropriate regulatory agency pursuant to section 15B(c)(5) of the Act or by a registered securities association pursuant to rules adopted under section 15A(b)(7) of the Act, and no natural person shall be associated with a municipal securities broker, dealer or municipal securities dealer in contravention of any effective restrictions imposed upon such person by the Commission pursuant to sections 15(b)(6) or 15B(c)(4) of the Act or by an appropriate regulatory agency pursuant to section 15B(c)(5) of the Act or by a registered securities association pursuant to rules adopted under section 15A(b)(7) of the Act.

(b) No municipal securities broker, dealer or municipal securities dealer that is a member of a registered securities association shall effect any transaction in, or induce or attempt to induce the purchase or sale of, any municipal security, or otherwise act in contravention of or fail to act in accordance with rules adopted by the association as of April 3, 1984, pertaining to remedial activities of members experiencing financial or operational difficulties, as if such rules were applicable to such municipal securities broker, dealer or municipal securities dealer.

 

Rule G-6 – Fidelity Bonding Requirements

No municipal securities broker, dealer or municipal securities dealer that is a member of a registered securities association shall be qualified for purposes of rule G-2 unless such broker, dealer or municipal securities dealer has met the fidelity bonding requirements set forth in the rules of such association, to the same extent as if such rules were applicable to such broker, dealer or municipal securities dealer.

 

Rule G-7 – Information Concerning Associated Persons

(a) No associated person (as hereinafter defined) of a municipal securities broker, dealer or municipal securities dealer shall be qualified for purposes of rule G-2 of the Board unless such associated person meets the requirements of this rule. The term "associated person" as used in this rule means (i) a municipal securities principal, (ii) a municipal securities sales principal, (iii) a financial and operations principal, and (iv) a municipal securities representative.

(b) Every municipal securities broker, dealer and municipal securities dealer shall obtain from each of its associated persons (as defined in paragraph section (a) of this rule), and each associated person shall furnish to the municipal securities broker, dealer or municipal securities dealer with which such person is or seeks to be associated, a questionnaire, which shall be signed by a municipal securities principal or general securities principal, containing at least the following information:

        (i) such person’s name, residence address, social security number, and the starting date or anticipated starting date of such person’s employment or other association with such municipal securities broker, dealer or municipal securities dealer;

        (ii)-(vii) No change.

        (viii) a record of any convictions of such person within the past ten years involving the purchase or sale of any security, the taking of a false oath, the making of a false report, bribery, perjury, burglary, or conspiracy to commit any such offense; or arising out of the conduct of the business of a broker, dealer, municipal securities dealer, investment advisor, bank, insurance company or fiduciary; or involving the larceny, theft, robbery, extortion, forgery, counterfeiting, fraudulent concealment, embezzlement, fraudulent conversion, or misappropriation of funds or securities; or involving the violation of section 152, 1341, 1342, or 1343 or chapter 25 or 47 of title 18, United States Code; and

        (ix)-(x) No change.

A completed Form U-4 or similar form prescribed by the Commission or a registered securities association for municipal securities brokers, dealers and municipal securities dealers other than bank dealers or, in the case of a bank dealer a completed Form MSD-4 or similar form prescribed by the appropriate regulatory agency for such bank dealer, containing the foregoing information, shall satisfy the requirements of this paragraph section.

(c) To the extent any information furnished by an associated person pursuant to paragraph section (b) of this rule is or becomes materially inaccurate or incomplete, such associated person shall furnish in writing to the municipal securities broker, dealer or municipal securities dealer with which such person is or seeks to be associated a statement correcting such information.

(d) For the purpose of verifying the information furnished by an associated person pursuant to paragraph section (b) of this rule, every municipal securities broker, dealer and municipal securities dealer shall make inquiry of all employers of such associated person during the three years immediately preceding such person’s association with such municipal securities broker, dealer or municipal securities dealer concerning the accuracy and completeness of such information as well as such person’s record and reputation as related to the person’s ability to perform his or her duties and each such prior employer which is a municipal securities broker, dealer or municipal securities dealer shall make such information available within ten business days following a request made pursuant to the requirements of this paragraph section (d).

(e) Every municipal securities broker, dealer and municipal securities dealer shall maintain and preserve a copy of the questionnaire furnished pursuant to paragraph section (b) of this rule, and of any additional statements furnished pursuant to paragraph section (c) of this rule, until at least three years after the associated person’s employment or other association with such municipal securities broker, dealer or municipal securities dealer has terminated.

(f) Every municipal securities broker, dealer and municipal securities dealer shall maintain and preserve a record of the name and residence address of each associated person, designated by the category of function performed (whether municipal securities principal, municipal securities sales principal, municipal securities representative or financial and operations principal) and indicating whether such person has taken and passed the qualification examination for municipal securities principals, municipal securities sales principals, or municipal securities representatives or financial and operations principals prescribed by the Board or was exempt from the requirement to take and pass such examination, indicating the basis for such exemption, until at least three years after the associated person’s employment or other association with such municipal securities broker, dealer or municipal securities dealer has terminated.

(g) Every municipal securities broker, dealer and municipal securities dealer which is a member of a registered securities association shall file with such association, every bank dealer shall file with the appropriate regulatory agency for such bank dealer, and every municipal securities broker, dealer or municipal securities dealer other than a bank dealer which is not a member of a registered securities association shall file with the Commission, such of the information prescribed by this rule as such association, agency, or the Commission, respectively, shall by rule or regulation require.

(h) Any records required to be maintained and preserved pursuant to this rule shall be preserved in accordance with the requirements of paragraphs sections (d), (e) and (f) of rule G-9 of the Board.

 

Rule G-8 – Books and Records to be Made by Brokers, Dealers and Municipal Securities Dealers

(a) Description of Books and Records Required to be Made. Except as otherwise specifically indicated in this rule, every broker, dealer and municipal securities dealer shall make and keep current the following books and records, to the extent applicable to the business of such broker, dealer or municipal securities dealer:

        (i) Records of Original Entry. "Blotters" or other records of original entry containing an itemized daily record of all purchases and sales of municipal securities, all receipts and deliveries of municipal securities (including certificate numbers and, if the securities are in registered form, an indication to such effect), all receipts and disbursement of cash with respect to transactions in municipal securities, all other debits and credits pertaining to transactions in municipal securities, and in the case of municipal securities brokers, dealers and municipal securities dealers other than bank dealers, all other cash receipts and disbursements if not contained in the records required by any other provision of this rule. The records of original entry shall show the name or other designation of the account for which each such transaction was effected (whether effected for the account of such municipal securities broker, dealer or municipal securities dealer, the account of a customer, or otherwise), the description of the securities, the aggregate par value of the securities, the dollar price or yield and aggregate purchase or sale price of the securities, accrued interest, the trade date, and the name or other designation of the person from whom purchased or received or to whom sold or delivered. With respect to accrued interest and information relating to "when issued" transactions which may not be available at the time a transaction is effected, entries setting forth such information shall be made promptly as such information becomes available.

        (ii) Account Records. Account records for each customer account and account of such municipal securities broker, dealer or municipal securities dealer. Such records shall reflect all purchases and sales of municipal securities, all receipts and deliveries of municipal securities, all receipts and disbursements of cash, and all other debits and credits relating to such account. A bank dealer shall not be required to maintain a record of a customer’s bank credit or bank debit balances for purposes of this subparagraph.

        (iii) Securities Records. Records showing separately for each municipal security all positions (including, in the case of a municipal securities broker, dealer or municipal securities dealer other than a bank dealer, securities in safekeeping) carried by such municipal securities broker, dealer or municipal securities dealer for its account or for the account of a customer (with all "short" trading positions so designated), the location of all such securities long and the offsetting position to all such securities short, and the name or other designation of the account in which each position is carried. Such records shall also show all long security count differences and short count differences classified by the date of physical count and verification on which they were discovered. Such records shall consist of a single record system. With respect to purchases or sales, such records may be posted on either a settlement date basis or a trade date basis, consistent with the manner of posting the records of original entry of such municipal securities broker, dealer or municipal securities dealer. For purposes of this subparagraph, multiple maturities of the same issue of municipal securities, as well as multiple coupons of the same maturity, may be shown on the same record, provided that adequate secondary records exist to identify separately such maturities and coupons. With respect to securities which are received in and delivered out by such municipal securities broker, dealer or municipal securities dealer the same day on or before the settlement date, no posting to such records shall be required. Anything herein to the contrary notwithstanding, a non-clearing municipal securities broker, dealer or municipal securities dealer which effects transactions for the account of customers on a delivery against payment basis may keep the records of location required by this subparagraph in the form of an alphabetical list or lists of securities showing the location of such securities rather than a record of location separately for each security. Anything herein to the contrary notwithstanding, a bank dealer shall maintain records of the location of securities in its own trading account.

        (iv) Subsidiary Records. Ledgers or other records reflecting the following:

(A) municipal securities in transfer;

(B) municipal securities to be validated;

(C) municipal securities borrowed or loaned; and

(D) municipal securities transactions not completed on settlement date.

Such records shall contain the following information:

(A)-(D) No change.

Such records shall be maintained as subsidiary records to the general ledger maintained by such municipal securities broker, dealer or municipal securities dealer. Anything herein to the contrary notwithstanding, the requirements of this subparagraph will be satisfied if the information described is readily obtainable from other records maintained by such municipal securities broker, dealer or municipal securities dealer.

        (v) Put Options and Repurchase Agreements. Records of all options (whether written or oral) to sell municipal securities (i.e., put options) and of all repurchase agreements (whether written or oral) with respect to municipal securities, in which such municipal securities broker, dealer or municipal securities dealer has any direct or indirect interest or which such municipal securities broker, dealer or municipal securities dealer has granted or guaranteed, showing the description and aggregate par value of the securities, and the terms and conditions of the option, agreement or guarantee.

        (vi) Records for Agency Transactions. A memorandum of each agency order and any instructions given or received for the purchase or sale of municipal securities pursuant to such order, showing the terms and conditions of the order and instructions, and any modification thereof, the account for which entered, the date and time of receipt of the order by such municipal securities broker, dealer or municipal securities dealer, the price at which executed, the date of execution and, to the extent feasible, the time of execution and, if such order is entered pursuant to a power of attorney or on behalf of a joint account, corporation or partnership, the name and address (if other than that of the account) of the person who entered the order. If an agency order is canceled by a customer, such records shall also show the terms, conditions and date of cancellation, and, to the extent feasible, the time of cancellation. Orders entered pursuant to the exercise of discretionary power by such municipal securities broker, dealer or municipal securities dealer shall be designated as such. For purposes of this subparagraph, the term "agency order" shall mean an order given to a municipal securities broker, dealer or municipal securities dealer to buy a specific security from another person or to sell a specific security to another person, in either case without such municipal securities broker, dealer or municipal securities dealer acquiring ownership of the security. Customer inquiries of a general nature concerning the availability of securities for purchase or opportunities for sale shall not be considered to be orders. For purposes of this subparagraph and subparagraph (vii) below, the term "memorandum" shall mean a trading ticket or other similar record. For purposes of this subparagraph, the term "instructions" shall mean instructions transmitted within an office with respect to the execution of an agency order, including, but not limited to, instructions transmitted from a sales desk to a trading desk.

        (vii) Records for Transactions as Principal. A memorandum of each transaction in municipal securities (whether purchase or sale) for the account of such municipal securities broker, dealer or municipal securities dealer, showing the price and date of execution and, to the extent feasible, the time of execution; and in the event such purchase or sale is with a customer, a record of the customer’s order, showing the date and time of receipt, the terms and conditions of the order, and the name or other designation of the account in which it was entered and, if such order is entered pursuant to a power of attorney or on behalf of a joint account, corporation, or partnership, the name and address (if other than that of the account) of the person who entered the order.

        (viii) No change.

        (ix) Copies of Confirmations and Certain Other Notices to Customers. A copy of all confirmations of purchase or sale of municipal securities and, in the case of a municipal securities broker, dealer or municipal securities dealer other than a bank dealer, of all other notices sent to customers concerning debits and credits to customer accounts or, in the case of a bank dealer, notices of debits and credits for municipal securities, cash and other items with respect to transactions in municipal securities.

        (x) Financial Records. Every municipal securities broker, dealer and municipal securities dealer subject to the provisions of rule 15c3-1 under the Act shall make and keep current the books and records described in subparagraphs (a)(2), (a)(4)(iv) and (vi), and (a)(11) of rule 17a-3 under the Act.

        (xi) Customer Account Information. A record for each customer, other than an institutional account, setting forth the following information to the extent applicable to such customer:

(A)-(K) No change.

For purposes of this subparagraph, the terms "general securities representative" and "general securities principal" shall mean such persons as so defined by the rules of a national securities exchange or registered securities association. For purposes of this subparagraph, the term "institutional account" shall mean the account of (i) a bank, savings and loan association, insurance company, or registered investment company; (ii) an investment adviser registered either with the Commission under Section 203 of the Investment Advisers Act of 1940 or with a state securities commission (or any agency or office performing like functions); or (iii) any other entity (whether a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 million. Anything in this subparagraph to the contrary notwithstanding, every municipal securities broker, dealer and municipal securities dealer shall maintain a record of the information required by items (A), (C), (F), (H), (I) and (K) of this subparagraph with respect to each customer which is an institutional account.

        (xii) Customer Complaints. A record of all written complaints of customers, and persons acting on behalf of customers, and what action, if any, has been taken by such municipal securities broker, dealer or municipal securities dealer in connection with each such complaint. The term "complaint" shall mean any written statement alleging a grievance involving the activities of the municipal securities broker, dealer or municipal securities dealer or any associated persons of such municipal securities broker, dealer or municipal securities dealer with respect to any matter involving a customer’s account.

        (xiii) Records Concerning Deliveries of Official Statements. A record of all deliveries, to purchasers of new issue municipal securities, of official statements or other disclosures concerning the underwriting arrangements required under rule G-32.

        (xiv)-(xv) No change.

        (xvi) Records Concerning Political Contributions and Prohibitions on Municipal Securities Business Pursuant to Rule G-37. Records reflecting:

(A)-(G) No change.

(H) Dealers Brokers, dealers and municipal securities dealers shall maintain copies of the Forms G-37/G-38 and G-37x sent to the Board along with the certified or registered mail receipt or other record of sending such forms to the Board.

(I)-(K) No change.

        (xvii)-(xix) No change.

(b) Manner in which Books and Records are to be Maintained. Nothing herein contained shall be construed to require a municipal securities broker, dealer or municipal securities dealer to maintain the books and records required by this rule in any given manner, provided that the information required to be shown is clearly and accurately reflected thereon and provides an adequate basis for the audit of such information, nor to require a municipal securities broker, dealer or municipal securities dealer to maintain its books and records relating to transactions in municipal securities separate and apart from books and records relating to transactions in other types of securities; provided, however, that in the case of a bank dealer, all records relating to transactions in municipal securities effected by such bank dealer must be separately extractable from all other records maintained by the bank.

(c) Non-Clearing Municipal Securities Brokers, Dealers and Municipal Securities Dealers. A municipal securities broker, dealer or municipal securities dealer which executes transactions in municipal securities but clears such transactions through a clearing broker, dealer, or bank, or through a clearing agency, shall not be required to make and keep such books and records prescribed in this rule as are customarily made and kept by a clearing broker, dealer, bank or clearing agency; provided that, in the case of a municipal securities broker, dealer or municipal securities dealer other than a bank dealer, the arrangements with such clearing broker, dealer or bank meet all applicable requirements prescribed in subparagraph (b) of rule 17a-3 under the Act, or the arrangements with such clearing agency have been approved by the Commission or, in the case of a bank dealer, such arrangements have been approved by the appropriate regulatory agency for such bank dealer; and further provided that such municipal securities broker, dealer or municipal securities dealer shall remain responsible for the accurate maintenance and preservation of such books and records if they are maintained by a clearing agent other than a clearing broker or dealer.

(d) Introducing Municipal Securities Brokers, Dealers and Municipal Securities Dealers. A municipal securities broker, dealer or municipal securities dealer which, as an introducing municipal securities broker, dealer or municipal securities dealer, clears all transactions with and for customers on a fully disclosed basis with a clearing broker, dealer or municipal securities dealer, and which promptly transmits all customer funds and securities to the clearing broker, dealer or municipal securities dealer which carries all of the accounts of such customers, shall not be required to make and keep such books and records prescribed in this rule as are customarily made and kept by a clearing broker, dealer or municipal securities dealer and which are so made and kept; and such clearing broker, dealer or municipal securities dealer shall be responsible for the accurate maintenance and preservation of such books and records.

(e)-(f) No change.

Rule G-9 – Preservation of Records

(a) Records to be Preserved for Six Years. Every broker, dealer and municipal securities dealer shall preserve the following records for a period of not less than six years:

        (i)-(iv) No change.

        (v) the customer complaint records described in rule G-8(a)(xii); and

        (vi) if such municipal securities broker, dealer or municipal securities dealer is subject to rule 15c3-1 under the Act, the general ledgers described in paragraph (a)(2) of rule 17a-3 under the Act.;

        (vii) the record, described in rule G-27(b)(ii), of each person designated as responsible for supervision of the municipal securities activities of the broker, dealer, or municipal securities dealer and the designated principal’s supervisory responsibilities, provided that such record shall be preserved for the period of designation of each person designated and for at least six years following any change in such designation.;

        (viii) the records to be maintained pursuant to rule G-8(a)(xvi); provided, however, that copies of Forms G-37x shall be preserved for the period during which such Forms G-37x are effective and for at least six years following the end of such effectiveness.;

        (ix) the records regarding information on gifts and gratuities and employment agreements required to be maintained pursuant to rule G-8(a)(xvii).; and

        (x) the records required to be maintained pursuant to rule G-8(a)(xviii).

(b) Records to be Preserved for Three Years. Every broker, dealer and municipal securities dealer shall preserve the following records for a period of not less than three years:

        (i)-(vi) No change.

        (vii) if such municipal securities broker, dealer or municipal securities dealer is subject to rule 15c3-1 under the Act, the records described in subparagraphs (a)(4)(iv) and (vi) and (a)(11) of rule 17a-3 and subparagraphs (b)(5) and (b)(8) of rule 17a-4 under the Act;

        (viii) the following records, to the extent made or received by such municipal securities broker, dealer or municipal securities dealer in connection with its business as such municipal securities broker, dealer or municipal securities dealer and not otherwise described in this rule:

(A)-(B) No change.

(C) all written communications received and sent, including inter-office memoranda, relating to the conduct of the activities of such municipal securities broker, dealer or municipal securities dealer with respect to municipal securities;

(D) all written agreements entered into by such municipal securities broker, dealer or municipal securities dealer, including agreements with respect to any account; and

(E) No change.

        (ix)-(xiii) No change.

(c) Records to be Preserved for Life of Enterprise. Every municipal securities broker, dealer and municipal securities dealer other than a bank dealer shall preserve during the life of such municipal securities broker, dealer or municipal securities dealer and of any successor municipal securities broker, dealer or municipal securities dealer all partnership articles or, in the case of a corporation, all articles of incorporation or charter, minute books and stock certificate books.

(d) No change.

(e) Method of Record Retention. Whenever a record is required to be preserved by this rule, such record may be retained either as an original or as a copy or other reproduction thereof, or on microfilm, electronic or magnetic tape, or by the other similar medium of record retention, provided that such municipal securities broker, dealer or municipal securities dealer shall have available adequate facilities for ready retrieval and inspection of any such record and for production of easily readable facsimile copies thereof and, in the case of records retained on microfilm, electronic or magnetic tape, or other similar medium of record retention, duplicates of such records shall be stored separately from each other for the periods of time required by this rule.

(f) Effect of Lapse of Registration. The requirements of this rule shall continue to apply, for the periods of time specified, to any municipal securities broker, dealer or municipal securities dealer which ceases to be registered with the Commission, except in the event a successor registrant shall undertake to maintain and preserve the books and records described herein for the required periods of time.

(g) Compliance with Rules 17a-3 and 17a-4. Municipal securities brokers Brokers, dealers and municipal securities dealers other than bank dealers which are in compliance with rules 17a-3 and 17a-4 under the Act will be deemed to be in compliance with the requirements of this rule, provided that the records enumerated in paragraph section (f) of rule G-8 of the Board shall in any event be preserved for the applicable time periods specified in this rule.

 

Rule G-11 – Sales of New Issue Municipal Securities During the Underwriting Period

(a) Definitions. For purposes of this rule, the following terms have the following meanings:

        (i)-(vi) No change.

        (vii) The term "related portfolio," when used with respect to a broker, dealer or municipal securities dealer, means a municipal securities investment portfolio of such broker, dealer or municipal securities dealer or of any person directly or indirectly controlling, controlled by or under common control with such broker, dealer or municipal securities dealer.

        (viii)-(x) No change.

(b) Disclosure of Capacity. Every broker, dealer or municipal securities dealer which is a member of a syndicate that submits an order to a syndicate or to a member of a syndicate for the purchase of municipal securities held by the syndicate shall disclose at the time of submission of such order if the securities are being purchased for its dealer account, for the account of a related portfolio of such broker, dealer or municipal securities dealer, for a municipal securities investment trust sponsored by such broker, dealer or municipal securities dealer, or for an accumulation account established in connection with such a municipal securities investment trust.

(c) Confirmations of Sale. Sales of securities held by a syndicate to a related portfolio, municipal securities investment trust or accumulation account referred to in section (b) above shall be confirmed by the syndicate manager directly to such related portfolio, municipal securities investment trust or accumulation account or for the account of such related portfolio, municipal securities investment trust or accumulation account to the broker, dealer or municipal securities dealer submitting the order. Nothing herein contained shall be construed to require that sales of municipal securities to a related portfolio, municipal securities investment trust or accumulation account be made for the benefit of the syndicate.

(d) Disclosure of Group Orders. Every broker, dealer or municipal securities dealer that submits a group order to a syndicate or to a member of a syndicate shall disclose at the time of submission of such order the identity of the person for whom the order is submitted. This section shall not apply to a qualified note syndicate as defined in paragraph (a)(x) above.

        (e)-(h) No change.

 

Rule G-12 – Uniform Practice

(a)-(d) No change.

(e) Delivery of Securities. The following provisions shall, unless otherwise agreed by the parties, govern the delivery of securities:

        (i)-(xiii) No change.

        (xiv) Delivery of Registered Securities

(A)-(D) No change.

(E) Form of Registration. Delivery of a certificate accompanied by the documentation required in this paragraph (xiv) shall constitute good delivery if the certificate is registered in the name of:

(1)-(2) No change.

(3) a member of a national securities exchange whose specimen signature is on file with the transfer agent or any other municipal securities broker, dealer or municipal securities dealer who has filed specimen signatures with the transfer agent and places a statement to this effect on the assignment; or

(4) No change.

        (xv) No change.

        (xvi) Money Differences. The following money differences shall not be sufficient to cause rejection of delivery:

 

Par Value Maximum Differences Per Transaction
$1,000 to 24,999 $10
25,000 to 99,999 25
100,000 to 249,999 60
250,000 to 999,999 250
1,000,000 and over 500

 

The calculations of the seller shall be utilized in determining the maximum permissible differences and amount of payment to be made upon delivery. However, if the money difference is due to the computation by one party of the formula required under rule G-33 directly to the settlement date of the transaction, and the use by the other party of another computation method (including the dollar price interpolation method permitted under subparagraph (b)(i)(D) of rule G-33), the calculations of the party computing directly to the settlement date shall be deemed accurate, and payment made in accordance with such calculations. The parties shall seek to reconcile any such money differences within ten business days following settlement.

(f) Use of Automated Comparison, Clearance, and Settlement Systems.

        (i)-(ii) No change.

        (iii) For purposes of paragraph (i) of this section (f) a municipal securities broker, dealer or municipal securities dealer who clears a transaction through an agent who is a member of a registered clearing agency shall be deemed to be a member of such registered clearing agency with respect to such transaction.

(g) Rejections and Reclamations.

        (i)-(ii) No change.

        (iii) Basis for Reclamation and Time Limits. A reclamation may be made by the receiving party or a demand for reclamation may be made by the delivering party if, subsequent to delivery, information is discovered which, if known at the time of the delivery, would have caused the delivery not to constitute good delivery, provided such reclamation or demand for reclamation is made within the following time limits:

(A) Reclamation or demand for reclamation by reason of the following shall be made within one business day following the date of delivery:

(1)-(2) No change.

(3) not good delivery because a legal opinion or other documents referred to in paragraph (e)(xi) hereof were missing.; or

(B)-(D) No change.

(h) Close-Out. Transactions which have been confirmed or otherwise agreed upon by both parties but which have not been completed may be closed out in accordance with this section, or as otherwise agreed by the parties.

        (i) Close-Out by Purchaser. With respect to a transaction which has not been completed by the seller according to its terms and the requirements of this rule, the purchaser may close out the transaction in accordance with the following procedures:

(A)-(B) No change.

(C) Contents of Notices. Written notices sent in accordance with the requirements of subparagraphs (A) or (B) above shall contain the following information:

(1) The notice of close-out required under subparagraph (A) above shall set forth:

(a) the name and address of the municipal securities broker, dealer or municipal securities dealer originating the notice;

(b) the name and address of the municipal securities broker, dealer or municipal securities dealer to whom the notice is being sent;

(c)-(j) No change.

(2) The notice of retransmittal required under subparagraph (B) above shall set forth:

(a) the name and address of the municipal securities broker, dealer or municipal securities dealer retransmitting the notice;

(b) the name and address of the municipal securities broker, dealer or municipal securities dealer to whom the notice is being retransmitted;

(c) the name of the municipal securities broker, dealer or municipal securities dealer originating the notice;

(d)-(k) No change.

(3) The notice of extension of dates required under subparagraph (B) above shall set forth:

(a) the name and address of the municipal securities broker, dealer or municipal securities dealer originating the notice of close-out;

(b) the name and address of the municipal securities broker, dealer or municipal securities dealer retransmitting the notice;

(c) the name of the municipal securities broker, dealer or municipal securities dealer to whom the notice is being retransmitted;

(d)-(j) No change.

(D)-(G) No change.

        (ii) Close-Out by Seller. If a seller makes good delivery according to the terms of the transaction and the requirements of this rule and the purchaser rejects delivery, the seller may close out the transaction in accordance with the following procedures:

(A) No change.

(B) Content of Notice. The written notice sent in accordance with the requirements of subparagraph (A) above shall set forth:

(1) the name and address of the municipal securities broker, dealer or municipal securities dealer originating the notice;

(2) the name and address of the municipal securities broker, dealer or municipal securities dealer to whom the notice is being sent;

(3)-(10) No change.

(C)-(D) No change.

        (iii)-(iv) No change.

        (i)-(l) No change.

 

Rule G-13 – Quotations Relating to Municipal Securities

 

(a) General. The provisions of this rule shall apply to all quotations relating to municipal securities which are distributed or published, or caused to be distributed or published, by any municipal securities broker, dealer or municipal securities dealer or any person associated with and acting on behalf of a municipal securities broker, dealer or municipal securities dealer. For purposes of this rule, the term "quotation" shall mean any bid for, or offer of, municipal securities, or any request for bids for or offers of municipal securities, including indications of "bid wanted" or "offer wanted." The terms "distributed" or "published" shall mean the dissemination of quotations by any means of communication. Reference in this rule to a municipal securities broker, dealer or municipal securities dealer shall be deemed to include reference to any person associated with a municipal securities broker, dealer or municipal securities dealer.

(b) Bona Fide Quotations.

        (i) Except as provided below, no municipal securities broker, dealer or municipal securities dealer shall distribute or publish, or cause to be distributed or published, any quotation relating to municipal securities, unless the quotation represents a bona fide bid for, or offer of, municipal securities by such municipal securities broker, dealer or municipal securities dealer, provided, however, that all quotations, unless otherwise indicated at the time made, shall be subject to prior purchase or sale and to subsequent change in price. If such municipal securities broker, dealer or municipal securities dealer is distributing or publishing the quotation on behalf of another broker, dealer, or municipal securities dealer, such municipal securities broker, dealer or municipal securities dealer shall have no reason to believe that such quotation does not represent a bona fide bid for, or offer of, municipal securities. Nothing in this paragraph shall be construed to prohibit requests for bids or offers, including indications of "bid wanted" or "offer wanted," or shall be construed to prohibit nominal quotations, if such quotations are, at the time made, clearly stated or indicated to be such. For purposes of this paragraph, a "nominal quotation" shall mean an indication of the price given solely for informational purposes.

        (ii) No municipal securities broker, dealer or municipal securities dealer shall distribute or publish, or cause to be distributed or published, any quotation relating to municipal securities, unless the price stated in the quotation is based on the best judgment of such municipal securities broker, dealer or municipal securities dealer of the fair market value of the securities which are the subject of the quotation at the time the quotation is made. If a municipal securities broker, dealer or municipal securities dealer is distributing or publishing a quotation on behalf of another broker, dealer, or municipal securities dealer, such municipal securities broker, dealer or municipal securities dealer shall have no reason to believe that the price stated in the quotation is not based on the best judgment of the fair market value of the securities of the broker, dealer or municipal securities dealer on whose behalf such municipal securities broker, dealer or municipal securities dealer is distributing or publishing the quotation.

        (iii) For purposes of subparagraph (i), a quotation shall be deemed to represent a "bona fide bid for, or offer of, municipal securities" if the municipal securities broker, dealer or municipal securities dealer making the quotation is prepared to purchase or sell the security which is the subject of the quotation at the price stated in the quotation and under such conditions, if any, as are specified at the time the quotation is made.

        (iv) No municipal securities broker, dealer or municipal securities dealer shall knowingly misrepresent a quotation relating to municipal securities made by any other broker, dealer, or municipal securities dealer.

(c) Multiple Markets in the Same Securities. No municipal securities broker, dealer or municipal securities dealer participating in a joint account shall, together with one or more other participants in such account, distribute or publish, or cause to be distributed or published, quotations relating to the municipal securities which are the subject of such account if such quotations indicate more than one market for the same securities.

 

Rule G-14 – Reports of Sales or Purchases

 

(a)-(b) No change.

 

Rule G-14 Transaction Reporting Procedures

(a) No change.

(b) Customer Transactions

        (i) No change.

        (ii) The information submitted in accordance with this procedure shall include: the CUSIP number of the security; the trade date; the time of trade execution; the executing broker symbol identifying the broker, dealer or municipal securities dealer that effected the transaction; a symbol indicating the dealer’s capacity of the broker, dealer or municipal securities dealer as buyer or seller in the transaction; the par value traded; the dollar price of the transaction, exclusive of any commission; the yield of the transaction; a symbol indicating the dealer’s capacity of the broker, dealer or municipal securities dealer as agent for the customer or principal in the transaction; the commission, if any; the settlement date, if known to the broker, dealer or municipal securities dealer; a control number, determined by the broker, dealer or municipal securities dealer, identifying the transaction; and a symbol indicating whether the trade has previously been reported to the Board, and, if so, the dealer’s control number used by the broker, dealer or municipal securities dealer for the previous report.

        (iii)-(iv) No change.

 

Rule G-15 – Confirmation, Clearance and Settlement of Transactions with Customers

(a) Customer Confirmation.

        (i)-(v) No change.

        (vi) Definitions. For purposes of this rule, the following terms shall have the following meanings:

(A)-(D) No change.

(E) Stripped coupon securities. The term "stripped coupon securities" shall have the same meaning as in SEC staff letter (stripped coupon municipal securities) dated January 19, 1989 (Stripped Coupon Municipal Securities, SEC No-Action Letter, Fed. Sec. L. Rep. (CCH) 78,949 (Jan. 19, 1989), reprinted in MSRB Reports, Vol. 9, No. 1 (March 1989) at 6-7. the MSRB Manual at 3571.

(F) No change.

(b) No change.

(c) Deliveries to Customers. Except as provided in section (d) below, a delivery of securities by a broker, dealer, or municipal securities dealer to a customer or to another person acting as agent for the customer shall, unless otherwise agreed by the parties or otherwise specified by the customer, be made in accordance with the following provisions:

    (i) Securities Delivered.

(A) All securities delivered on a transaction shall be identical as to the applicable information set forth in paragraph section (a) of this rule. All securities delivered shall also be identical as to the call provisions and the dated date of such securities.

(B) CUSIP Numbers.

(1) The securities delivered on a transaction shall have the same CUSIP number as that set forth on the confirmation of such transaction pursuant to the requirements of paragraph section (a) of this rule; provided, however, that for purposes of this item (1), a security shall be deemed to have the same CUSIP number as that specified on the confirmation (a) if the number assigned to the security and the number specified on the confirmation differ only as a result of a transposition or other transcription error, or (b) if the number specified on the confirmation has been assigned as a substitute or alternative number for the number reflected on the security.

(2) No change.

        (ii) Delivery Ticket. A delivery ticket shall accompany the delivery of securities. Such ticket shall contain the information set forth in paragraph section (a) of this rule.

        (iii) Units of Delivery. Delivery of bonds shall be made in the following denominations:

(A)-(B) No change.

Delivery of other municipal securities shall be made in the denominations specified on the confirmation as required pursuant to paragraph section (a) of this rule.

        (iv)-(xi) No change.

        (xii) Delivery of Registered Securities.

(A) No change.

(B) Delivery to an Agent of the Customer. Registered securities delivered to an agent of a customer may be registered in the customer’s name or as otherwise directed by the customer. If such securities are not so registered, such securities shall be delivered in accordance with the following provisions:

(1)-(4) No change.

(5) Form of Registration. Delivery of a certificate accompanied by the documentation required in this subparagraph (B) shall constitute good delivery if the certificate is registered in the name of:

(a)-(b) No change.

(c) a member of a national securities exchange whose specimen signature is on file with the transfer agent or any other municipal securities broker, dealer or municipal securities dealer who has filed specimen signatures with the transfer agent and places a statement to this effect on the assignment; or

(d) No change.

(6) No change.

(C)-(D) No change.

(d)-(e) No change.

 

Rule G-16 – Periodic Compliance Examination

At least once each twenty-four months, each municipal securities broker, dealer and municipal securities dealer shall be examined in accordance with Section 15B(c)(7) of the Act to determine, at a minimum, whether such municipal securities broker, dealer or municipal securities dealer and its associated persons are in compliance with all applicable rules of the Board and all applicable provisions of the Act and rules and regulations of the Commission thereunder.

 

Rule G-18 – Execution of Transactions

Each broker, dealer and municipal securities dealer, when executing a transaction in municipal securities for or on behalf of a customer as agent, shall make a reasonable effort to obtain a price for the customer that is fair and reasonable in relation to prevailing market conditions. A municipal securities broker, dealer or municipal securities dealer acting as a "broker’s broker" shall be under the same obligation with respect to the execution of a transaction in municipal securities for or on behalf of a broker, dealer, or municipal securities dealer. For purposes of this rule, a municipal securities broker, dealer or municipal securities dealer acting as a "broker’s broker" shall mean a municipal securities broker, dealer or municipal securities dealer who effects transactions for the account of other brokers, dealers and municipal securities dealers on a regular basis.

 

Rule G-20 – Gifts and Gratuities

(a) Limitation on Value. No municipal securities broker, dealer or municipal securities dealer shall, directly or indirectly, give or permit to be given any thing or service of value, including gratuities, in excess of $100 per year to a person other than an employee or partner of such municipal securities broker, dealer or municipal securities dealer, if such payments or services are in relation to the municipal securities activities of the employer of the recipient of the payment or service. For purposes of this rule the term "employer" shall include a principal for whom the recipient of a payment or service is acting as agent or representative.

(b) No change.

(c) Compensation for Services. Notwithstanding the foregoing, the provisions of section (a) of this rule shall not apply to contracts of employment with or to compensation for services rendered by another person; provided, that there is in existence prior to the time of employment or before the services are rendered a written agreement between the municipal securities broker, dealer or municipal securities dealer subject to this rule and the person who is to perform such services; and provided, further, that such agreement shall include the nature of the proposed services, the amount of the proposed compensation, and the written consent of such person’s employer.

 

Rule G-23 – Activities of Financial Advisors

(a) No change.

(b) Financial Advisory Relationship. For purposes of this rule, a financial advisory relationship shall be deemed to exist when a broker, dealer, or municipal securities dealer renders or enters into an agreement to render financial advisory or consultant services to or on behalf of an issuer with respect to a new issue or issues of municipal securities, including advice with respect to the structure, timing, terms and other similar matters concerning such issue or issues, for a fee or other compensation or in expectation of such compensation for the rendering of such services. Notwithstanding the foregoing, a financial advisory relationship shall not be deemed to exist when, in the course of acting as an underwriter, a broker, dealer or municipal securities dealer renders advice to an issuer, including advice with respect to the structure, timing, terms and other similar matters concerning a new issue of municipal securities.

(c)-(i) No change.

 

Rule G-27 – Supervision

(a) Obligation to supervise. Each broker, dealer and municipal securities dealer ("dealer") shall supervise the conduct of its municipal securities business and the municipal securities activities of the dealer and its associated persons to ensure compliance with Board rules and the applicable provisions of the Act and rules thereunder ("applicable rules").

 

(b) Designation of principals.

        (i) General. Each dealer shall specifically designate one or more associated persons qualified as municipal securities principals, municipal securities sales principals, financial and operations principals in accordance with Board rules, or as general securities principals to be responsible for the supervision of its municipal securities business and the municipal securities activities of the dealer and its associated persons as required by this rule.

        (ii) No change.

        (iii) Appropriate principal. Each dealer shall designate a municipal securities principal as responsible for its supervision under sections (a) and (c) of this rule, except as provided in this section. A non-bank dealer shall, and a non-bank dealer meeting the requirements of Securities Exchange Act rule 15c3-1(a)(2) or (3) or the exemption under rule 15c3-1(b)(3) may, designate a financial and operations principal as responsible for the financial reporting duties specified in rule G-3(d)(i)(A-E) and with primary responsibility for books and records under section (c)(v) below; provided, however, that a non-bank dealer meeting the requirements of Securities Exchange Act rule 15c3-1(a)(2)(iv), (v) or (vi) or the exemption under rule 15c3-1(b)(3) may, but is not required to, designate a financial and operations principal as responsible for such financial reporting duties and with primary responsibility for such books and records. In addition, a municipal securities sales principal may be designated as responsible for supervision under sections (c)(ii), (iii) and (vii) of this rule, to the extent the activities pertain to sales to or purchases from a customer; a general securities principal may be designated as responsible for supervision under sections (c)(v) and (vii)(A) of this rule and under rules G-7(b) and G-21(e); and a financial and operations principal may be designated as responsible for supervision under section (c)(vi) of this rule.

(c) Written supervisory procedures. Each dealer shall adopt, maintain and enforce written supervisory procedures reasonably designed to ensure that the conduct of its municipal securities business and the municipal securities activities of the dealer and its associated persons are in compliance as required in section (a) of this rule. Such procedures shall codify the dealer’s supervisory system for ensuring compliance and, at a minimum, shall establish procedures

        (i)-(vii) No change.

(d) No change.

 

Rule G-28 – Transactions with Employees and Partners of Other Municipal Securities Professionals

(a) Account Instructions. No broker, dealer or municipal securities dealer shall open or maintain an account in which transactions in municipal securities may be effected for a customer who such broker, dealer or municipal securities dealer knows is employed by, or the partner of, another municipal securities broker, dealer or municipal securities dealer, or for or on behalf of the spouse or minor child of such person unless such broker, dealer, or municipal securities dealer first gives written notice with respect to the opening and maintenance of such account to the municipal securities broker, dealer or municipal securities dealer by whom such person is employed or of whom such person is a partner.

(b) Account Transactions. No broker, dealer, or municipal securities dealer shall effect a transaction in municipal securities with or for an account subject to section (a) of this rule unless such broker, dealer, or municipal securities dealer

        (i) sends simultaneously to the employing municipal securities broker, dealer or municipal securities dealer a duplicate copy of each confirmation sent to the customer, and

        (ii) acts in accordance with any written instructions which may be provided to the broker, dealer or municipal securities dealer by an employing municipal securities broker, dealer or municipal securities dealer with respect to transactions effected with or for such account.

 

Rule G-32 – Disclosures in Connection with New Issues

(a) No change.

(b) Responsibility of Managing Underwriters, and Sole Underwriters and Financial Advisors.

        (i)-(ii) No change.

(c) No change.

 

Rule G-34 – CUSIP Numbers and New Issue Requirements

(a) New Issue Securities.

        (i) Assignment of CUSIP Numbers.

(A) Except as otherwise provided in this section (a), each municipal securities broker, dealer or municipal securities dealer who acquires, whether as principal or agent, a new issue of municipal securities from the issuer of such securities for the purpose of distributing such new issue shall apply in writing to the Board or its designee for assignment of a CUSIP number or numbers to such new issue. The municipal securities broker, dealer or municipal securities dealer shall make such application as promptly as possible, but in no event later than, in the case of negotiated sales, a time sufficient to ensure assignment of a CUSIP number or numbers on or prior to the business day on which the contract to purchase the securities from the issuer is executed; or, in the case of competitive sales, the date of award. A municipal securities broker, dealer or municipal securities dealer acting as a financial advisor to an issuer in connection with a competitive sale of an issue shall ensure that application for a CUSIP number or numbers is made in sufficient time to permit assignment of CUSIP numbers prior to the date of award. The municipal securities broker, dealer or municipal securities dealer shall provide to the Board or its designee the following information:

(1)-(8) No change.

(B) The information required by subparagraph (i)(A) of this section (a) shall be provided in accordance with the provisions of this subparagraph. At the time application is made the municipal securities broker, dealer or municipal securities dealer making such application shall provide to the Board or its designee a copy of a notice of sale, official statement, legal opinion, or other similar documentation prepared by or on behalf of the issuer, or portions of such documentation, reflecting the information required by subparagraph (i)(A) of this section (a). Such documentation may be submitted in preliminary form if no final documentation is available at the time of application. In such event the final documentation, or the relevant portions of such documentation, reflecting any changes in the information required by subparagraph (i)(A) of this section (a) shall be submitted when such documentation becomes available. If no such documentation, whether in preliminary or final form, is available at the time application for CUSIP number assignment is made, such copy shall be provided promptly after the documentation becomes available.

(C) The provisions of paragraph (i) of this section (a) shall not apply with respect to any new issue of municipal securities on which the issuer or a person acting on behalf of the issuer has submitted an application for assignment of a CUSIP number or numbers to such issue to the Board or its designee.

(D) In the event that the proceeds of the new issue will be used, in whole or in part, to refund an outstanding issue or issues of municipal securities in such a way that part but not all of the outstanding issue or issues previously assigned a single CUSIP number is to be refunded to one or more redemption date(s) and price(s) (or all of an outstanding issue is to be refunded to more than one redemption date and price), the municipal securities broker, dealer or municipal securities dealer shall apply in writing to the Board or its designee for a reassignment of a CUSIP number to each part of the outstanding issue refunded to a particular redemption date and price and shall provide to the Board or its designee the following information on the issue or issues to be refunded:

(1)-(3) No change.

The municipal securities broker, dealer or municipal securities dealer also shall provide documentation supporting the information provided pursuant to the requirements of this subparagraph (D).

        (ii) Application for Depository Eligibility, CUSIP Number Affixture and Initial Communications. Each broker, dealer or municipal securities dealer who acquires, whether as principal or agent, a new issue of municipal securities from the issuer of such securities for the purpose of distributing such new issue ("underwriter") shall carry out the following functions:

(A) Except as otherwise provided in this subparagraph (ii)(A), the underwriter shall apply to a securities depository registered with the Securities and Exchange Commission, in accordance with the rules and procedures of such depository, to make such new issue depository-eligible. The application required by this subparagraph (ii)(A) shall be made as promptly as possible, but in no event later than one business day after award from the issuer (in the case of a competitive sale) or one business day after the execution of the contract to purchase the securities from the issuer (in the case of a negotiated sale). In the event that the full documentation and information required to establish depository eligibility is not available at the time the initial application is submitted to the depository, the underwriter shall forward such documentation as soon as it is available; provided, however, this subparagraph (ii)(A) of this rule shall not apply to:

(1) an issue of municipal securities that fails to meet the criteria for depository eligibility at all depositories that accept municipal securities for deposit; or

(2) any new issue maturing in 60 days or less.;

(3) any new issue that is less than $1 million in par value; provided, however, that this exemption shall expire July 1, 1996.

        (iii) No change.

(b)-(c) No change.

 

Rule G-36 – Delivery of Official Statements, Advance Refunding Documents and Forms G-36(OS) and G-36(ARD) to Board or its Designee

(a) No change.

(b) Delivery Requirements for Issues Subject to Securities Exchange Act Rule 15c2-12.

        (i) Each broker, dealer or municipal securities dealer that acts as an underwriter in a primary offering of municipal securities 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 one business day after receipt of the official statement from the issuer or its designated agent, but no later than 10 business days after any final agreement to purchase, offer, or sell the municipal securities, the following documents and written information: two copies of the final official statement; and two copies of completed Form G-36 G-36(OS) prescribed by the Board, including the CUSIP number or numbers for the issue.

        (ii) No change.

(c)-(f) No change.

 

(g)(i) Delivery of Official Statements and Form G-36(OS) for Issues Prior to the Effective Date of Rule G-36. By August 29, 1990, each broker, dealer and municipal securities dealer that acts as an underwriter in a primary offering of municipal securities shall send to the Board or its designee by certified or registered mail, or some other equally prompt means that provides for a record of sending, the following documents and written information: official statements and Form G-36(OS) referred to in sections (b), (c) or (d), above, for each primary offering of municipal securities sold on or after January 1, 1990 to July 1, 1990.

        (ii) Delivery of Advance Refunding Documents for Issues Prior to the Effective Date of Rule G-36(b)(ii) and (c)(ii). By September 13, 1991, each broker, dealer and municipal securities dealer that acts as an underwriter in a primary offering of municipal securities shall send to the Board or its designee by certified or registered mail, or some other equally prompt means that provides for a record of sending, the following documents and written information: advance refunding documents and Form G-36(ARD) referred to in sections (b) and (c), above, for each primary offering of municipal securities sold on or after January 1, 1990, to July 13, 1991.

 

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

(a)-(f) No change.

(g) Definitions.

        (i)-(vi) No change.

        (vii) The term "municipal securities business" means:

(A) the purchase of a primary offering (as defined in rule A-13(d) A-13(f)) of municipal securities from the issuer on other than a competitive bid basis (i.e., e.g., negotiated underwriting); or

(B) the offer or sale of a primary offering of municipal securities on behalf of any issuer (i.e., e.g., private placement); or

(C)-(D) No change.

        (viii) No change.

(h) No change.

(i) A registered securities association with respect to a broker, dealer or municipal securities dealer who is a member of such association, or the appropriate regulatory agency as defined in Section 3(a)(34) of the Act with respect to any other broker, dealer or municipal securities dealer, upon application, may exempt, conditionally or unconditionally, a broker, dealer or municipal securities dealer who is prohibited from engaging in municipal securities business with an issuer pursuant to paragraph section (b) of this rule from such prohibition. In determining whether to grant such exemption, the registered securities association or appropriate regulatory agency shall consider, among other factors, whether:

        (i)-(ii) No change.

 

Rule G-39 – Telemarketing

(a) No broker, dealer or municipal securities dealer or person associated with a broker, dealer or municipal securities dealer shall:

 

        (a) (i) make outbound telephone calls to the residence of any person for the purpose of soliciting the purchase of municipal securities or related services at any time other than between 8 a.m. and 9 p.m. local time at the called person’s location, without the prior consent of the person; or

        (b) (ii) make an outbound telephone call to any person for the purpose of soliciting the purchase of municipal securities or related services without disclosing promptly and in a clear and conspicuous manner to the called person the following information:

(i) (A) the identity of the caller and the firm;

(ii) (B) the telephone number or address at which the caller may be contacted; and

(iii) (C) that the purpose of the call is to solicit the purchase of municipal securities or related services.

 

(c) (b) The prohibitions of paragraphs section (a) and (b) shall not apply to telephone calls by any person associated with a broker, dealer or municipal securities dealer, or another associated person acting at the direction of such person for the purpose of maintaining and servicing the accounts of existing customers of the broker, dealer or municipal securities dealer under the control of or assigned to such associated person:

        (i)-(iii) No change.

For the purpose of paragraph (c) section (b), the term "existing customer" means a customer for whom the broker, dealer or municipal securities dealer, or a clearing broker or dealer on behalf of such broker, dealer or municipal securities dealer, carries an account. The scope of this rule is limited to the telemarketing calls described herein; the terms of this rule shall not otherwise expressly or by implication impose on brokers, dealers or municipal securities dealers any additional requirements with respect to the relationship between a broker, dealer or municipal securities dealer and a customer or between a person associated with a broker, dealer or municipal securities dealer and a customer.


ENDNOTES

1.  File No. SR-MSRB-99-4. Comments submitted to the SEC should refer to this file number.

2.  Underlining indicates additions; strikethrough indicates deletions.

 

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