[Federal Register Volume 59, Number 248 (Wednesday, December 28, 1994)]
[Unknown Section]
[Page ]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-31885]


[Federal Register: December 28, 1994]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35128; File No. SR-MSRB-94-16]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Municipal Securities 
Rulemaking Board Relating to Interpretation of Rule G-37 on Political 
Contributions and Prohibitions on Municipal Securities Business

December 20, 1994.
    On December 6, 1994, the Municipal Securities Rulemaking Board 
(``Board'' or ``MSRB'') filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') a proposed rule change (File No. 
SR-MSRB-94-16), pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act''), 15 U.S.C. 78s(b)(1), and Rule 19b-4 thereunder. 
The proposed rule change is described in Items I, II, and III below, 
which Items have been prepared by the Board. The Board has designated 
this proposal as constituting a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of the Board under Section 19(b)(3)(A) 
of the Act, which renders the proposal effective upon receipt of this 
filing by the Commission. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Board is filing herewith a notice of interpretation concerning 
rule G-37 on political contributions and prohibitions on municipal 
securities business.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Board included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Board has prepared summaries, set forth in Sections 
(A), (B), and (C) below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    (a) On April 7, 1994, the Commission approved Board rule G-37, 
concerning political contributions and prohibitions on municipal 
securities business.\1\ Since that time, the Board has received 
numerous inquiries concerning the application of the rule. In order to 
assist the municipal securities industry and, in particular, brokers, 
dealers and municipal securities dealers in understanding and complying 
with the provisions of the rule, the Board published two prior notices 
of interpretation which set forth, in question-and-answer format, 
general guidance on rule G-37.\2\ In prior filings with the Commission, 
the Board stated that it will continue to monitor the application of 
rule G-37, and, from to time, will publish additional notices of 
interpretations, as necessary.\3\ In light of questions recently 
received from market participants concerning certain provisions of the 
rule, the Board has determined that it is necessary to provide further 
guidance to the municipal industry. Accordingly, the Board is 
publishing this third set of questions and answers which focus on those 
provisions of the rule relating to solicitation of municipal securities 
business and the proscription of indirect activities that may result in 
violations of the rule.
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    \1\Securities Exchange Act Release No. 33868 (April 7, 1994), 59 
FR 17621. The rule applies to contributions made on and after April 
25, 1994.
    \2\See Securities Exchange Act Release No. 34161 (June 6, 1994), 
59 FR 30379; Securities Exchange Act Release 34603 (August 25, 
1994), 59 FR 45049; see also MSRB Reports Vol. 14, No. 3 at 11-16 
(June 1994) and Vol. 14, No. 4 at 31-32 (August 1994).
    \3\File No.'s SR-MSRB-94-6 and 94-15.
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    (b) The Board believes that the proposed rule change is consistent 
with Section 15B(b)(2)(C) of the Act which provides that the Board's 
rules shall be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in municipal securities, to remove 
impediments to and perfect the mechanism of a free and open market in 
municipal securities, and, in general, to protect investors and the 
public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Board does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act, since it would apply equally to 
all brokers, dealers, and municipal securities dealers.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act and subparagraph (e) of Rule 19b-4 under the Act 
because the rule change constitutes an interpretation with respect to 
the meaning, administration, or enforcement of an existing rule of the 
MSRB. At any time within 60 days of the filing of a rule change, the 
Commission may summarily abrogate the rule change if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
MSRB. All submissions should refer to the file number in the caption 
above and should be submitted by January 17, 1995.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority, 17 CFR 200.30-3(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-31885 Filed 12-27-94; 8:45 am]
BILLING CODE 8010-01-M