[Federal Register Volume 60, Number 133 (Wednesday, July 12, 1995)]
[Notices]
[Pages 35976-35977]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-17050]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35939; File No. SR-MSRB-95-10]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the Municipal Securities
Rulemaking Board Relating to an Interpretation of Board rule G-11, on
Sales of New Issue Municipal Securities During the Underwriting Period
July 5, 1995.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on June 14,
1995, 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-95-10). The proposed
rule change is described in Items, I, II, and III below, which Items
have been prepared by the Board. 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 MSRB is filing an interpretation of Board rule G-11, on sales
of new issue municipal securities (hereafter referred to as ``the
proposed rule change'').
II. Self-Regulatory Organization's Statement of the Terms of Substance
of 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
The Board received an inquiry concerning situations where senior
syndicate managers charge bookrunning expenses or management fees to
syndicate members on a per-bond basis. The Board believes that
discretionary fees for clearance costs and management fees may be
expressed as a per bond charge. Under rule G-11, however, these
expenses must be disclosed to members prior to the submission of a bid
or prior to the extension of a purchase contract with the issuer; for
example, in the Agreement Among Underwriters. The rule also provides
that the senior syndicate manager must provide an itemized statement to
syndicate members at or before final settlement of the syndicate
account setting forth a detailed breakdown of actual expenses incurred
on behalf of the syndicate, such as advertising, printing, legal,
computer services, etc. The Board believes a per-bond fee creates the
appearance that it is not an actual expense related to and incurred on
behalf of the syndicate. The interpretation urges senior syndicate
[[Page 35977]]
managers to exercise care in accounting for syndicate funds, and states
that any charge that has not been disclosed to members prior to the
submission of a bid or prior to the execution of a purchase contract
may be charged to syndicate members only if it is an actual expense
incurred on behalf of the syndicate.
The Board believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act, which requires, in pertinent part,
that the Board's rules: 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.
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 thereunder
because the proposed rule change is an interpretation of an existing
MSRB rule. At any time within 60 days of filing of the proposed 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, D.C. 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 the filing will also be
available for inspection and copying at the Board's principal offices.
All submissions should refer to File No. SR-MSRB-95-10 and should be
submitted by August 2, 1995.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\1\
\1\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 95-17050 Filed 7-11-95; 8:45 am]
BILLING CODE 8010-01-M