Rule G-38.
(a) Prohibited Payments. Subject to section (c) of this rule, no
broker, dealer or municipal securities dealer may provide or agree to provide,
directly or indirectly, payment to any person who is not an affiliated person
of the broker, dealer or municipal securities dealer for a solicitation of
municipal securities business on behalf of such broker, dealer or municipal
securities dealer.
(b) Definitions. For purposes of this rule, the
following terms shall have the following meanings:
(i) The term “solicitation” means a
direct or indirect communication by any person with an issuer for the purpose
of obtaining or retaining municipal securities business.
(ii) The term “affiliated person of
the broker, dealer or municipal securities dealer” means any person who is a
partner, director, officer, employee or registered person of the broker, dealer
or municipal securities dealer (or, in the case of a bank dealer, any person
occupying a similar status or performing similar functions for the bank dealer)
or of an affiliated company of the broker, dealer or municipal securities
dealer.
(iii) The term “affiliated company
of the broker, dealer or municipal securities dealer” means any entity directly
or indirectly controlling, controlled by, or under common control with the
broker, dealer or municipal securities dealer whose activities with respect to
the broker, dealer or municipal securities dealer or with respect to any other
affiliated company of the broker, dealer or municipal securities dealer are not
limited solely to the solicitation of municipal securities business.
(iv) The term “registered person” means any associated person of the broker, dealer or municipal securities
dealer duly qualified in one or more categories of qualification under Rule
G-3 or duly qualified and registered in one or more categories of
registration under the rules of a registered securities association.
(v) The terms “issuer,” “municipal securities
business” and “payment” shall have the meanings set forth in Rule G-37(g).
(c) Transitional
Payments.
(i) A broker, dealer
or municipal securities dealer may make payments to a person other than an
affiliated person of the broker, dealer or municipal securities dealer for a
solicitation of municipal securities business on behalf of such broker, dealer
or municipal securities dealer if such payment is made with respect solely to
solicitation activities undertaken by such person on or prior to the effective
date of this rule pursuant to a Consultant Agreement under former Rule G-38,
but only if:
(A) such person has not
solicited municipal securities business from any issuer on behalf of the
broker, dealer or municipal securities dealer at any time after the effective
date of this rule; and
(B) the broker, dealer or
municipal securities dealer sends to the Board, by the last day of the month
following the end of each calendar quarter during which payments to such person
are made or remain pending, Form G-38t, setting forth, in the prescribed
format, the information required to be disclosed to the Board pursuant to
section (e) of former Rule G-38; provided that each item of municipal
securities business for which payment remains pending (together with a specific
dollar amount or objective formula for determining the specific dollar amount
of the pending payment) must be listed on the first quarterly Form G-38t due after the effective date of this rule and on each subsequent quarterly Form
G-38t until such quarter in which payment is finally made. The broker, dealer or municipal securities
dealer shall send two copies of Form G-38t to the Board by certified or
registered mail, or some other equally prompt means that provides a record of
sending. The Board shall make public a
copy of each Form G-38t received from any broker, dealer or municipal
securities dealer.
(ii) For purposes of this section
(c), the term “effective date of this rule” means August 29, 2005, and the term “former Rule G-38” means Rule G-38 of the Board in effect on the day
prior to the effective date of this rule.
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