[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

[[Page 1526]]

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