Rule G-11. (a)
Definitions. For purposes of this rule, the following terms
have the following meanings:
(i) The term "accumulation account" means an account
established in connection with a municipal securities investment
trust to hold securities pending their deposit in such trust.
(ii) The term "date of sale" means, in the case of
competitive sales, the date on which all bids for the purchase
of securities must be submitted to an issuer, and, in the case
of negotiated sales, the date on which the contract to purchase
securities from an issuer is executed.
(iii) The term "group order" means an order for securities
held in syndicate, which order is for the account of all members
of the syndicate on a pro rata basis in proportion to their
respective participations in the syndicate. Any such order submitted
directly to the senior syndicate manager will, for purposes
of this rule, be deemed to be the submission of such order by
such manager to the syndicate.
(iv) The term "municipal securities investment trust"
means a unit investment trust, as defined in the Investment
Company Act of 1940, the portfolio of which consists in whole
or in part of municipal securities.
(v) The term "order period" means the period of time,
if any, announced by a syndicate during which orders will be
solicited for the purchase of securities held in syndicate.
(vi) The term "priority provisions" means the provisions
adopted by a syndicate governing the allocation of securities
to different categories of orders.
(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) The term "syndicate" means an account formed
by two or more persons for the purpose of purchasing, directly
or indirectly, all or any part of a new issue of municipal securities
from the issuer, and making a distribution thereof.
(ix) The term "qualified note syndicate" means any
syndicate formed for the purpose of purchasing and distributing
a new issue of municipal securities that matures in less than
two years where:
(A) the new issue is to be purchased by the syndicate on
other than an "all or none" basis; or
(B) the syndicate has provided that:
(1) there is to be no order period;
(2) only group orders will be accepted; and,
(3) the syndicate may purchase and sell the municipal securities
for its own account.
(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 subsection (a)(ix) above.
(e) Priority Provisions. Every syndicate shall establish
priority provisions and, if such priority provisions may be changed,
the procedure for making changes. For purposes of this rule, the
requirement to establish priority provisions shall not be satisfied
if a syndicate provides only that the syndicate manager or managers
may determine in the manager's or managers' discretion the priority
to be accorded different types of orders. Notwithstanding the
preceding sentence, a syndicate may include a provision permitting
the syndicate manager or managers on a case-by-case basis to allocate
securities in a manner other than in accordance with the priority
provisions, if the syndicate manager or managers determine in
its or their discretion that it is in the best interests of the
syndicate. In the event any such allocation is made, the syndicate
manager or managers shall have the burden of justifying that such
allocation was in the best interests of the syndicate.
(f) Communications Relating to Issuer Syndicate Requirements,
Priority Provisions and Order Period. Prior to the first
offer of any securities by a syndicate, the senior syndicate manager
shall furnish in writing to the other members of the syndicate
(i) a written statement of all terms and conditions required by
the issuer, (ii) the priority provisions, (iii) the procedure,
if any, by which such priority provisions may be changed, (iv)
if the senior syndicate manager or managers are to be permitted
on a case-by-case basis to allocate securities in a manner other
than in accordance with the priority provisions, the fact that
they are to be permitted to do so, and (v) if there is to be an
order period, whether orders may be confirmed prior to the end
of the order period. Any change in the priority provisions shall
be promptly furnished in writing by the senior syndicate manager
to the other members of the syndicate. Syndicate members shall
promptly furnish in writing the information described in this
section to others, upon request. If the senior syndicate manager,
rather than the issuer, prepares the written statement of all
terms and conditions required by the issuer, such statement shall
be provided to the issuer.
(g) Designations and Allocations of Securities. The
senior syndicate manager shall:
(i) within 24 hours of the sending of the commitment wire,
complete the allocation of securities; provided however, that,
if at the time allocations are made the purchase contract in
a negotiated sale is not yet signed or the award in a competitive
sale is not yet made, such allocations shall be made subject
to the signing of the purchase contract or the awarding of the
securities, as appropriate, and the purchaser must be informed
of this fact;
(ii) within two business days following the date of sale, disclose
to the other members of the syndicate, in writing, a summary,
by priority category, of all allocations of securities which
are accorded priority over members' take-down orders, indicating
the aggregate par value, maturity date and price of each maturity
so allocated, including any allocation to an order confirmed
at a price other than the original list price. The summary shall
include allocations of securities to orders submitted through
the end of the order period or, if the syndicate does not have
an order period, through the first business day following the
date of sale;
(iii) disclose, in writing, to each member of the syndicate
all available information on designations paid to syndicate
and non-syndicate members expressed in total dollar amounts
within 10 business days following the date of sale and all information
about designations paid to syndicate and non-syndicate members
expressed in total dollar amounts with the sending of the designation
checks pursuant to section (j) below; and
(iv) disclose to the members of the syndicate, in writing,
the amount of any portion of the take-down directed to each
member by the issuer. Such disclosure is to be made by the later
of 15 business days following the date of sale or three business
days following receipt by the senior syndicate manager of notification
of such set asides of the take-down.
(h) Disclosure of Syndicate Expenses and Other Information.
At or before the final settlement of a syndicate account, the
senior syndicate manager shall furnish to the other members of
the syndicate:
(i) an itemized statement setting forth the nature and amounts
of all actual expenses incurred on behalf of the syndicate.
Notwithstanding the foregoing, any such statement may include
an item for miscellaneous expenses, provided that the amount
shown under such item is not disproportionately large in relation
to other items of expense shown on the statement and includes
only minor items of expense which cannot be easily categorized
elsewhere in the statement. Discretionary fees for clearance
costs to be imposed by a syndicate manager and management fees
shall be disclosed to syndicate members prior to the submission
of a bid, in the case of a competitive sale, or prior to the
execution of a purchase contract with the issuer, in the case
of a negotiated sale. For purposes of this section, the term
"management fees" shall include, in addition to amounts
categorized as management fees by the syndicate manager, any
amount to be realized by a syndicate manager, and not shared
with the other members of the syndicate, which is attributable
to the difference in price to be paid to an issuer for the purchase
of a new issue of municipal securities and the price at which
such securities are to be delivered by the syndicate manager
to the members of the syndicate; and
(ii) a summary statement showing:
(A) the identity of each related portfolio, municipal securities
investment trust, or accumulation account referred to in section
(b) above submitting an order to which securities have been
allocated as well as the aggregate par value and maturity
date of each maturity so allocated;
(B) the identity of each person submitting a group order
to which securities have been allocated as well as the aggregate
par value and maturity date of each maturity so allocated
except that this subparagraph shall not apply to the senior
syndicate manager of a qualified note syndicate as defined
in subsection (a)(ix) above; and
(C) the aggregate par values and prices (expressed in terms
of dollar prices or yields) of all securities sold from the
syndicate account. This subparagraph shall not apply to a
qualified note syndicate as defined in subsection (a)(ix) above.
(i) Settlement of Syndicate or Similar Account. Final settlement of a syndicate or similar account formed for the purchase of securities shall be made within 60 calendar days following the date all securities have been delivered by the syndicate or account manager to the syndicate or account members.
(j) Payments of Designations. Any credit designated by a customer in connection with the purchase of securities as due to a member of a syndicate or similar account shall be distributed to such member by the broker, dealer or municipal securities dealer handling such order within 30 calendar days following the date the issuer delivers the securities to the syndicate.
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