Contact: Lynnette Kelly Hotchkiss, Executive Director
(703) 797-6600
lhotchkiss@msrb.org
MSRB Publishes Interpretation on Payments to Non-Political Accounts of Political Organizations Under Rule G-37
Alexandria , VA - Today, the Municipal Securities Rulemaking Board ("MSRB") published an interpretive letter relating to its Rule G-37, on political contributions and prohibitions on municipal securities business. Rule G-37 was originally adopted by the MSRB in 1994 in an effort to remove the real or perceived conflict of interest present when municipal securities broker-dealers make political contributions to issuer officials and then are awarded municipal securities business by such officials. The interpretive letter provides guidance with respect to payments to housekeeping, conference or overhead accounts ("non-political accounts") of political committees, political parties, political action committees and other political entities or committees within the meaning of Section 527 of the Internal Revenue Code ("political organizations"). The letter emphasizes that broker-dealers must adopt and enforce written supervisory procedures with respect to payments to non-political accounts of political organizations reasonably designed to ensure that such payments are not used to indirectly circumvent the other provisions of Rule G-37 that would be triggered by a direct contribution to an issuer official. The letter further notes that not all payments to political organizations that make contributions to issuer officials will necessarily trigger the ban on municipal securities business under Rule G-37 but that appropriate supervisory procedures with respect to any such payments must be adopted and enforced by the broker-dealer.
A copy of a notice that includes the text of the interpretive letter is attached and will soon be available at the MSRB's web site at www.msrb.org.
