[Federal Register Volume 84, Number 23 (Monday, February 4, 2019)]
[Notices]
[Pages 1525-1527]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-00802]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84999; File No. SR-MSRB-2019-01]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing and Immediate Effectiveness of a Proposed Rule
Change To Extend the Effective Date of Previously-Approved Amendments
to Rule G-21 and New Rule G-40
January 29, 2019.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on January 28, 2019 the Municipal Securities Rulemaking Board
(``MSRB'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the MSRB. The Commission is
publishing this notice to
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solicit comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB filed with the Commission a proposed rule change to extend
the February 7, 2019, effective date of previously-approved amendments
to Rule G-21, on advertising by brokers, dealers or municipal
securities dealers, and new Rule G-40, on advertising by municipal
advisors (``proposed rule change'').\3\ The MSRB has designated the
proposed rule change for immediate effectiveness. The new effective
date of the amendments to Rule G-21 and new Rule G-40 will be announced
in an MSRB Notice to be published on the MSRB's website no later than
60 days following publication of the proposed rule change in the
Federal Register. The effective date to be announced will be not later
than 180 days following publication of the MSRB Notice.
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\3\ See Release No. 34-83177 (May 7, 2018); 83 FR 21794 (May 10,
2018) (File No. SR-MSRB-2018-01). The SEC also approved a technical
amendment to Rule G-42, on duties of non-solicitor municipal
advisors. The compliance date for this amendment to Rule G-42 would
remain February 7, 2019.
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The text of the proposed rule change is available on the MSRB's
website at www.msrb.org/Rules-and-Interpretations/SEC-Filings/2019-Filings.aspx, at the MSRB's principal office, and at the Commission's
Public Reference Room.
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 MSRB 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 MSRB 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
1. Purpose
The MSRB proposes to extend the effective date of amendments to
Rule G-21 and new Rule G-40 (collectively ``advertising rules''). On
May 7, 2018, the Commission approved the amendments with an effective
date of February 7, 2019.\4\
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\4\ Id.
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The amendments to Rule G-21 (i) provide more specific content
standards for advertisements by brokers, dealers or municipal
securities dealers (collectively, dealers), (ii) revise the rule's
general standards for advertisements, and (iii) reconcile analogous
provisions relating to the definition of ``form letter'' in Rule G-21
with the definition of correspondence in FINRA Rule 2210, on
communications. The amendments also include a technical amendment in
paragraph (e) to streamline the rule.
New Rule G-40 includes general provisions, addresses professional
advertisements by municipal advisors, and requires principal approval,
in writing, for advertisements by municipal advisors before their first
use. The general provisions (i) define key terms, including the term
``advertisement,'' (ii) provide content standards, such as the
requirement that an advertisement be based on the principles of fair
dealing and good faith and be fair and balanced, and (iii) provide
general standards for advertisements, namely that a municipal advisor
shall not publish or disseminate an advertisement that the municipal
advisor knows or has reason to know contains any untrue statement of
material fact or is otherwise false or misleading.
In setting an effective date of February 7, 2019, the MSRB was
seeking to provide dealers and municipal advisors sufficient time to
establish and implement effective processes and procedures to comply
with the advertising rules. Consistent with that intent, the MSRB
planned to provide guidance relating to: A municipal advisor's use of
case studies and municipal advisory client lists; Rule G-40's content
standards; and the use of social media.\5\ The MSRB is seeking to
extend the effective date of the amendment to Rule G-21 and new Rule G-
40 because additional time is needed to finalize its initial guidance
and any related rule changes concerning the use of social media under
MSRB advertising rules and, subsequently, allow dealers and municipal
advisors to establish and implement effective policies and procedures
for compliance with the advertising rules.
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\5\ See Letter from Pamela K. Ellis, Associate General Counsel,
MSRB, dated April 30, 2018, available at http://msrb.org/~/media/
Files/SEC-Filings/2018/MSRB-2018-
01%20MSRB%20Letter%20to%20SEC.ashx?.
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Accordingly, the MSRB submits this proposed rule change to extend
the effective date of the amendments to Rule G-21 and new Rule G-40.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2)(C) of the Act,\6\ which provides that the MSRB's
rules shall:
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\6\ 15 U.S.C. 78o-4(b)(2)(C).
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 and
municipal financial products, to remove impediments to and perfect
the mechanism of a free and open market in municipal securities and
municipal financial products, and, in general, to protect investors,
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municipal entities, obligated persons, and the public interest.
The proposed rule change does not alter any rule language but
extends the effective date of the amendments to Rule G-21 and new Rule
G-40, which were previously approved by the Commission. The MSRB
believes that by extending the effective date until after the guidance
concerning the use of social media under MSRB advertising rules is
finalized, dealers and municipal advisors will be afforded the time
necessary to develop effective compliance procedures. Therefore, the
proposed rule change will promote effective compliance with MSRB
advertising rules and help prevent fraudulent and manipulative
practices, promote just and equitable principles of trade, and protect
investors, municipal entities, obligated persons and the public
interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
Section 15B(b)(2)(C) of the Act \7\ requires that MSRB rules be
designed not to impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Act. The MSRB does
not believe that the proposed rule change will impose any burden on
competition not necessary or appropriate in furtherance of the Act. The
proposed rule change will not alter any rule language and will,
instead, only extend the effective date of the amendments to Rule G-21
and new Rule G-40.
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\7\ Id.
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Additionally, Section 15B(b)(2)(L)(iv) of the Act, requires that
MSRB rules not impose a regulatory burden on small municipal advisors
that is not necessary or appropriate in the public interest and for the
protection of investors, municipal entities, and obligated persons,
provided that there is robust
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protection of investors against fraud.\8\ The MSRB believes that the
proposed rule change is consistent with Section 15B(b)(2)(L)(iv) of the
Act in that, while the proposed rule change would affect all municipal
advisors, including small municipal advisors, any regulatory burden
that results is necessary and appropriate in order to promote
regulatory consistency of advertising standards.
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\8\ 15 U.S.C. 78o-4(b)(2)(L)(iv).
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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 on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Pursuant to Section 19(b)(3)(A) \9\ of the Act and Rule 19b-4(f)(6)
\10\ thereunder, the MSRB has designated the proposed rule change as
one that effects a change that: (i) Does not significantly affect the
protection of investors or the public interest; (ii) does not impose
any significant burden on competition; and (iii) by its terms, does not
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate. A proposed rule change
filed under Rule 19b-4(f)(6) normally does not become operative until
30 days after the date of filing.\11\ However, Rule 19b-4(f)(6)(iii)
\12\ permits the Commission to designate a shorter time if such action
is consistent with the protection of investors and the public
interest.\13\ The MSRB has requested that the Commission designate the
proposed rule change operative upon filing,\14\ as specified in Rule
19b-4(f)(6)(iii),\15\ which would make the proposed rule change
operative on January 28, 2019.
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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
\11\ Id.
\12\ 17 CFR 240.19b-4(f)(6)(iii).
\13\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its
intent to file a proposed rule change, along with a brief
description and text of such proposed rule change, at least five
business days prior to the date of filing, or such shorter time as
designated by the Commission. The Commission has designated a
shorter time for delivery of such written notice.
\14\ See SR-MSRB-2018-10.
\15\ 17 CFR 240.19b-4(f)(6)(iii).
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The MSRB notes that the proposed rule change does not contain any
amendments to the text of MSRB rules but extends the effective date of
the amendments to Rule G-21 and new Rule G-40, which were previously
approved by the Commission. The MSRB believes that by extending the
effective date until after the guidance concerning the use of social
media under MSRB advertising rules is finalized, dealers and municipal
advisors will be afforded the time necessary to develop effective
compliance procedures. Further, the MSRB has stated that, in light of a
30-day operative period that would conclude after the original
effective date of February 7, 2019, an earlier operative date would
provide regulatory certainty to dealers and municipal advisors that the
effective date for compliance with the amendments to Rule G-21 and new
Rule G-40 is extended.
The Commission believes that waiving the 30-day operative delay is
consistent with the protection of investors and the public interest.
The proposed rule change will help promote effective compliance with
the amendments to Rule G-21 and new Rule G-40. Waiver of the 30-day
operative period will provide certainty to dealers and municipal
advisors that the effective date for compliance with the amendments to
Rule G-21 and new Rule G-40 is extended in advance of February 7, 2019
and avoid confusion in the market. Accordingly, the Commission hereby
waives the 30-day operative delay specified in Rule 19b-4(f)(6)(iii)
and designates the proposed rule change to be operative upon
filing.\16\
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\16\ For the purpose of waiving the 30-day operative delay for
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. See 15
U.S.C. 78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such 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, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-MSRB-2019-01 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549.
All submissions should refer to File Number SR-MSRB-2019-01. This file
number should be included on the subject line if email is used. To help
the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (http://www.sec.gov/rules/sro.shtml).
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 website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the principal office of the MSRB. All comments received
will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-MSRB-2019-01 and should be submitted on
or before February 25, 2019.
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\17\ 17 CFR 200.30-3(a)(12).
For the Commission, pursuant to delegated authority.\17\
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-00802 Filed 2-1-19; 8:45 am]
BILLING CODE P