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Books and Records to be Made by Brokers, Dealers and Municipal Securities Dealers |
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Rule G-8.
(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 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 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. Dollar price, yield and
accrued interest relating to any transaction shall be required
to be shown only to the extent required to be included in the
confirmation delivered by the broker, dealer or municipal securities
dealer in connection with such transaction under rule G-12 or
rule G-15. (ii) Account Records. Account records for each customer
account and account of such 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 broker, dealer or municipal securities dealer other
than a bank dealer, securities in safekeeping) carried by such
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 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 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 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 information: (A) Municipal securities in transfer. With respect
to municipal securities which have been sent out for transfer,
the description and the aggregate par value of the securities,
the name in which registered, the name in which the securities
are to be registered, the date sent out for transfer, the
address to which sent for transfer, former certificate numbers,
the date returned from transfer, and new certificate numbers. (B) Municipal securities to be validated. With respect
to municipal securities which have been sent out for validation,
the description and the aggregate par value of the securities,
the date sent out for validation, the address to which sent
for validation, the certificate numbers, and the date returned
from validation. (C) Municipal securities borrowed or loaned. With
respect to municipal securities borrowed or loaned, the date
borrowed or loaned, the name of the person from whom borrowed
or to whom loaned, the description and the aggregate par value
of the securities borrowed or loaned, the value at which the
securities were borrowed or loaned, and the date returned. (D) Municipal securities transactions not completed on
settlement date. With respect to municipal securities
transactions not completed on the settlement date, the description
and the aggregate par value of the securities which are the
subject of such transactions, the purchase price (with respect
to a purchase transaction not completed on the settlement
date), the sale price (with respect to a sale transaction
not completed on the settlement date), the name of the customer,
broker, dealer or municipal securities dealer from whom delivery
is due or to whom delivery is to be made, and the date on
which the securities are received or delivered. All municipal
securities transactions with brokers, dealers and municipal
securities dealers not completed on the settlement date shall
be separately identifiable as such. For purposes of this rule,
the term "settlement date" means the date upon which
delivery of the securities is due in a purchase or sale transaction. Such records shall be maintained as subsidiary records to the
general ledger maintained by such 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 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 broker, dealer or municipal securities dealer
has any direct or indirect interest or which such 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 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 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 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 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 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) Records of Syndicate Transactions. With respect
to each syndicate, joint or similar account formed for the purchase
of municipal securities, records shall be maintained by a managing
underwriter designated by the syndicate or account to maintain
the books and records of the syndicate or account, showing the
description and aggregate par value of the securities, the name
and percentage of participation of each member of the syndicate
or account, the terms and conditions governing the formation
and operation of the syndicate or account (including a separate
statement of all terms and conditions required by the issuer),
all orders received for the purchase of the securities from
the syndicate or account (except bids at other than syndicate
price), all allotments of securities and the price at which
sold, the date and amount of any good faith deposit made to
the issuer, the date of settlement with the issuer, the date
of closing of the account, and a reconciliation of profits and
expenses of the account. (ix) Copies of Confirmations, Periodic Statements and Certain
Other Notices to Customers. A copy of all confirmations
of purchase or sale of municipal securities, of all periodic
written statements disclosing purchases, sales or redemptions
of municipal fund securities pursuant to rule G-15(a)(viii),
of written disclosures to customers, if any, as required under
rule G-15(f)(iii) and, in the case of a 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 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) customer's name and residence or principal business address; (B) whether customer is of legal age; (C) tax identification or social security number; (D) occupation; (E) name and address of employer; (F) information about the customer used pursuant to rule
G-19(c)(ii) in making recommendations to the customer. For
non-institutional accounts, all data obtained pursuant to
rule G-19(b) shall be recorded. (G) name and address of beneficial owner or owners of such
account if other than the customer and transactions are to
be confirmed to such owner or owners; (H) signature of municipal securities representative, general
securities representative or limited representative – investment
company and variable contracts products introducing the account
and signature of a municipal securities principal, municipal
securities sales principal or general securities principal
indicating acceptance of the account; (I) with respect to discretionary accounts, customer's written
authorization to exercise discretionary power or authority
with respect to the account, written approval of municipal
securities principal or municipal securities sales principal
who supervises the account, and written approval of municipal
securities principal or municipal securities sales principal
with respect to each transaction in the account, indicating
the time and date of approval; (J) whether customer is employed by another broker, dealer
or municipal securities dealer; and (K) in connection with the hypothecation of the customer's
securities, the written authorization of, or the notice provided
to, the customer in accordance with Commission rules 8c-1
and 15c2-1. (L) with respect to official communications, customer’s written
authorization, if any, that the customer does not object to
the disclosure of its name, security position(s) and contact
information to a party identified in G-15(g)(iii)(A)(1) for
purposes of transmitting official communications under G-15(g). (M) Predispute Arbitration Agreements with Customers. (1) Any predispute arbitration clause shall be highlighted and shall be immediately preceded by the following language in outline form: This agreement contains a predispute arbitration clause. By signing an arbitration agreement the parties agree as follows: (a) All parties to this agreement are giving up the right to sue each other in court, including the right to a trial by jury, except as provided by the rules of the arbitration forum in which a claim is filed. (b) Arbitration awards are generally final and binding; a party's ability to have a court reverse or modify an arbitration award is very limited. (c) The ability of the parties to obtain documents, witness statements and other discovery is generally more limited in arbitration than in court proceedings. (d) The arbitrators do not have to explain the reason(s) for their award. (e) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry. (f) The rules of some arbitration forums may impose time limits for bringing a claim in arbitration. In some cases, a claim that is ineligible for arbitration may be brought in court. (g) The rules of the arbitration forum in which the claim is filed, and any amendments thereto, shall be incorporated into this agreement. (2)(a) In any agreement containing a predispute arbitration agreement, there shall be a highlighted statement immediately preceding any signature line or other place for indicating agreement that states that the agreement contains a predispute arbitration clause. The statement shall also indicate at what page and paragraph the arbitration clause is located. (b) Within thirty days of signing, a copy of the agreement containing any such clause shall be given to the customer who shall acknowledge receipt thereof on the agreement or on a separate document. (3)(a) A broker, dealer or municipal securities dealer shall provide a customer with a copy of any predispute arbitration clause or customer agreement executed between the customer and the broker, dealer or municipal securities dealer, or inform the customer that the broker, dealer or municipal securities dealer does not have a copy thereof, within ten business days of receipt of the customer's request. If a customer requests such a copy before the broker, dealer or municipal securities dealer has provided the customer with a copy pursuant to subparagraph (2)(b) above, the broker, dealer or municipal securities dealer must provide a copy to the customer by the earlier date required by this subparagraph (3)(a) or by subparagraph (2)(b) above. (b) Upon request by a customer, a broker, dealer or municipal securities dealer shall provide the customer with the names of, and information on how to contact or obtain the rules of, all arbitration forums in which a claim may be filed under the agreement. (4) No predispute arbitration agreement shall include any condition that: (i) limits or contradicts the rules of any self-regulatory organization; (ii) limits the ability of a party to file any claim in arbitration; (iii) limits the ability of a party to file any claim in court permitted to be filed in court under the rules of the forums in which a claim may be filed under the agreement; (iv) limits the ability of arbitrators to make any award. (5) If a customer files a complaint in court against a broker, dealer or municipal securities dealer that contains claims that are subject to arbitration pursuant to a predispute arbitration agreement between the broker, dealer or municipal securities dealer and the customer, the broker, dealer or municipal securities dealer may seek to compel arbitration of the claims that are subject to arbitration. If the broker, dealer or municipal securities dealer seeks to compel arbitration of such claims, the broker, dealer or municipal securities dealer must agree to arbitrate all of the claims contained in the complaint if the customer so requests. (6) All agreements shall include a statement that “No person shall bring a putative or certified class action to arbitration, nor seek to enforce any predispute arbitration agreement against any person who has initiated in court a putative class action; who is a member of a putative class who has not opted out of the class with respect to any claims encompassed by the putative class action until: (i) the class certification is denied; or (ii) the class is decertified; or (iii) the customer is excluded from the class by the court. Such forbearance to enforce an agreement to arbitrate shall not constitute a waiver of any rights under this agreement except to the extent stated herein.” (7) These provisions of Rule G-8(a)(xi)(M) are effective as of May 1, 2005. For purposes of this subparagraph, the terms “general securities
representative,” “general securities principal” and “limited representative
– investment company and variable contracts products” 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 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 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
broker, dealer or municipal securities dealer or any associated
persons of such 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 and, if applicable, a record evidencing compliance
with section (a)(i)(C) of rule G-32. (xiv) Designation of Persons Responsible for Recordkeeping.
A record of all designations of persons responsible for the
maintenance and preservation of books and records as required
by rule G-27(b)(ii). (xv) Records Concerning Delivery of Official Statements,
Advance Refunding Documents and Forms G-36(OS) and G-36(ARD)
to the Board or its Designee. A broker, dealer or municipal
securities dealer that acts as an underwriter in a primary offering
of municipal securities subject to rule G-36 (or, in the event
a syndicate or similar account has been formed for the purpose
of underwriting the issue, the managing underwriter) shall maintain: (A) a record of the name, par amount and CUSIP number or
numbers for all such primary offerings of municipal securities;
the dates that the documents and written information referred
to in rule G-36 are received from the issuer and are sent
to the Board or its designee; the date of delivery of the
issue to the underwriters; and, for issues subject to Securities
Exchange Act Rule 15c2-12, the date of the final agreement
to purchase, offer or sell the municipal securities; and (B) copies of the Forms G-36(OS) and G-36(ARD) and documents
submitted to the Board or its designee along with the certified
or registered mail receipt or other record of sending such
forms and documents to the Board or its designee. (xvi) Records Concerning Political Contributions and Prohibitions
on Municipal Securities Business Pursuant to Rule G-37.
Records reflecting: (A) a listing of the names, titles, city/county and state
of residence of all municipal finance professionals; (B) a listing of the names, titles, city/county and state
of residence of all non-MFP executive officers; (C) the states in which the broker, dealer or municipal securities
dealer is engaging or is seeking to engage in municipal securities
business; (D) a listing of issuers with which the broker, dealer or
municipal securities dealer has engaged in municipal securities
business, along with the type of municipal securities business
engaged in, during the current year and separate listings
for each of the previous two calendar years; (E) the contributions, direct or indirect, to officials of
an issuer and payments, direct or indirect, made to political
parties of states and political subdivisions, by the broker,
dealer or municipal securities dealer and each political action
committee controlled by the broker, dealer or municipal securities
dealer for the current year and separate listings for each
of the previous two calendar years, which records shall include:
(i) the identity of the contributors, (ii) the names and titles
(including any city/county/state or other political subdivision)
of the recipients of such contributions and payments, and
(iii) the amounts and dates of such contributions and payments; (F) the contributions, direct or indirect, to officials of
an issuer made by each municipal finance professional, any
political action committee controlled by a municipal finance
professional, and non-MFP executive officer for the current
year, which records shall include: (i) the names, titles,
city/county and state of residence of contributors, (ii) the
names and titles (including any city/county/state or other
political subdivision) of the recipients of such contributions,
(iii) the amounts and dates of such contributions;and (iv)
whether any such contribution was the subject of an automatic
exemption, pursuant to Rule G-37(j), including the amount
of the contribution, the date the broker, dealer or municipal
securities dealer discovered the contribution, the name of
the contributor, and the date the contributor obtained a return
of the contribution; provided, however, that such records
need not reflect any contribution made by a municipal finance
professional or non-MFP executive officer to officials of
an issuer for whom such person is entitled to vote if the
contributions made by such person, in total, are not in excess
of $250 to any official of an issuer, per election. In addition,
brokers, dealers and municipal securities dealers shall maintain
separate listings for each of the previous two calendar years
containing the information required pursuant to this subparagraph
(F) for those individuals meeting the definition of municipal
finance professional pursuant to subparagraphs (A) and (B)
of Rule G-37(g)(iv) and for any political action committee
controlled by such individuals, and separate listings for
the previous six months containing the information required
pursuant to this subparagraph (F) for those individuals meeting
the definition of municipal finance professional pursuant
to subparagraphs (C), (D) and (E) of Rule G-37(g)(iv) and
for any political action committee controlled by such individuals
and for any non-MFP executive officers; and (G) the payments, direct or indirect, to political parties
of states and political subdivisions made by all municipal
finance professionals, any political action committee controlled
by a municipal finance professional, and non-MFP executive
officers for the current year, which records shall include:
(i) the names, titles, city/county and state of residence
of contributors, (ii) the names, and titles (including any
city/county/state or other political subdivision) of the recipients
of such payments and (iii) the amounts and dates of such payments;
provided, however, that such records need not reflect those
payments made by any municipal finance professional or non-MFP
executive officer to a political party of a state or political
subdivision in which such persons are entitled to vote if
the payments made by such person, in total, are not in excess
of $250 per political party, per year.In addition, brokers,
dealers and municipal securities dealers shall maintain separate
listings for each of the previous two calendar years containing
the information required pursuant to this subparagraph (G)
for those individuals meeting the definition of municipal
finance professional pursuant to subparagraphs (A) and (B)
of rule G-37(g)(iv) and for any political action committee
controlled by such individuals, and separate listings for
the previous six months containing the information required
pursuant to this subparagraph (G) for those individuals meeting
the definition of municipal finance professional pursuant
to subparagraphs (C), (D) and (E) of rule G-37(g)(iv) and
for any political action committee controlled by such individuals
and for any non-MFP executive officers. (H)
Brokers, dealers and municipal securities dealers shall maintain copies of the Forms G-37 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) Terms used in this paragraph (xvi) have the same meaning
as in rule G-37. (J) No record is required by this paragraph (a)(xvi) of (i)
any municipal securities business done or contribution to
officials of issuers or political parties of states or political
subdivisions made prior to April 25, 1994 or (ii) any payment
to political parties of states or political subdivisions made
prior to March 6, 1995. (K)
No broker, dealer or municipal securities dealer shall be subject to the requirements of this paragraph (a)(xvi) during any period that such broker, dealer or municipal securities dealer has qualified for and invoked the exemption set forth in clause (B) of paragraph (e)(ii) of rule G-37; provided, however, that such broker, dealer or municipal securities dealer shall remain obligated to comply with clause (H) of this paragraph (a)(xvi) during such period of exemption. At such time as a broker, dealer or municipal securities dealer that has been exempted by this clause (K) from the requirements of this paragraph (a)(xvi) engages in any municipal securities business, all requirements of this paragraph (a)(xvi) covering the periods of time set forth herein (beginning with the then current calendar year and the two preceding calendar years) shall become applicable to such broker, dealer or municipal securities dealer. (xvii) Records Concerning Compliance with Rule G-20. Each broker, dealer and municipal securities dealer shall maintain: (A) a separate record of any gift or gratuity referred to in Rule G-20(a); (B) all agreements referred to in Rule G-20(c) and all compensation paid as a result of those agreements; and (C) records of all non-cash compensation referred to in Rule G-20(d). The records shall include the name of the person or entity making the payment, the names of the associated persons receiving the payments (if applicable), and the nature (including the location of meetings described in Rule G-20(d)(iii), if applicable) and value of non-cash compensation received. (xviii) Records Concerning Consultants Pursuant to Former Rule
G-38. Each broker, dealer and municipal securities dealer
shall maintain: (A)
a listing of the name of the
consultant pursuant to the Consultant Agreement, business address, role (including
the state or geographic area in which the consultant is working on behalf of
the broker, dealer or municipal securities dealer) and compensation arrangement
of each consultant; (B) a copy of each Consultant
Agreement referred to in former rule G-38(b); (C)
a listing of the compensation
paid in connection with each such Consultant Agreement; (D)
where applicable, a listing of
the municipal securities business obtained or retained through the activities
of each consultant; (E)
(F) records of each reportable political contribution (as defined in former rule G-38(a)(vi)), which records shall include: (1) the names, city/county and state of residence of contributors; (2) the names, city/county and state of residence of contributors; (3) the amounts and dates of such contributions; (G) records of each reportable political party payment (as defined in former rule G-38(a)(vii)), which records shall include: (1) the names, city/county and state of residence of contributors; (2) the names and titles (including any city/county/state or other political subdivision) of the recipients of such payments; and (3) the amounts and dates of such payments; (H) records indicating, if applicable, that a consultant made no reportable political contributions (as defined in former rule G-38(a)(vi)) or no reportable political party payments (as defined in former rule G-38(a)(vii)); (I) a statement, if applicable, that a consultant failed to provide any report of information to the dealer concerning reportable political contributions or reportable political party payments; (J) the date of termination of any consultant arrangement; and (K) copies of the Forms G-38t sent to the Board along with the certified or registered mail receipt or other record of sending such forms to the Board. For purposes of this clause (xviii), the term “former rule G-38” shall have the meaning set forth in Rule G-38(c)(ii).
(b) Manner in which Books and Records are to be Maintained. Nothing herein contained shall be construed to require a 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 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 Brokers, Dealers and Municipal Securities Dealers. A 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 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 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 Brokers, Dealers and Municipal Securities Dealers. A broker, dealer or municipal securities dealer which, as an introducing 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) Definition of Customer. For purposes of this rule, the term "customer" shall not include a broker, dealer or municipal securities dealer acting in its capacity as such or the issuer of the securities which are the subject of the transaction in question. (f) Compliance with Rules 17a-3. Brokers, dealers and municipal securities dealers other than bank dealers which are in compliance with rule 17a-3 of the Commission will be deemed to be in compliance with the requirements of this rule, provided that the information required by subparagraph (a)(iv)(D) of this rule as it relates to uncompleted transactions involving customers; paragraph (a)(viii); and paragraphs (a)(xi) through (a)(xxii) shall in any event be maintained. (g) Transactions in Municipal Fund Securities. (i) Books and Records Maintained by Transfer Agents. Books and records required to be maintained by a broker, dealer or municipal securities dealer under this rule solely with respect to transactions in municipal fund securities may be maintained by a transfer agent registered under Section 17A(c)(2) of the Act used by such broker, dealer or municipal securities dealer in connection with such transactions; provided that such broker, dealer or municipal securities dealer shall remain responsible for the accurate maintenance and preservation of such books and records. (ii) Price Substituted for Par Value of Municipal Fund Securities. For purposes of this rule, each reference to the term “par value,” when applied to a municipal fund security, shall be substituted with (A) in the case of a purchase of a municipal fund security by a customer, the purchase price paid by the customer, exclusive of any commission, and (B) in the case of a sale or tender for redemption of a municipal fund security by a customer, the sale price or redemption amount paid to the customer, exclusive of any commission or other charge imposed upon redemption or sale. Table of contents | Interpretive Notices | Interpretive Letter | Next Rule | Home Page |
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