SEC Approves Amendments to Rule G-27 on Supervision, Rule G-8 on Recordkeeping, and Rule G-9 on Record Retention. The Amendments Become Effective November 26, 2007
On May 22, 2007, the Securities and Exchange Commission (“SEC”) approved amendments to MSRB Rule G-27 on supervision, as well as related amendments to Rule G-8 on books and records, and Rule G-9 on preservation of records. The amendments will become effective on November 26, 2007.
In response to comment letters to the SEC, the MSRB has clarified two points raised by the commentators:
- The MSRB intends generally that the provisions of Rule G-27 be read consistently with the analogous NASD provisions, unless the MSRB specifically indicates otherwise. Thus, relevant NASD interpretations are presumed to apply to the comparable MSRB provision, subject to the MSRB’s right to make distinctions when necessary and appropriate. NASD previously has stated that “certain supervisory tasks may be delegated to a registered representative. However, in all cases, ultimate supervisory responsibility…must be assigned to one or more appropriately registered principals.” [Emphasis in original.] This guidance applies equally to Rule G-27.
- Pursuant to the amendments (as well as NASD requirements), dealers must designate one or more appropriately registered principals in each office of supervisory jurisdiction (“OSJ”) and each such principal must be located on site in each OSJ. The definition of OSJ in Rule G-27 includes (among other things) structuring of public offerings or private placements. Thus, if a person in a one-person office is involved in such activities, then that office is an OSJ and that person must be registered as a municipal securities principal.
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Questions regarding the amendments may be directed to Jill C. Finder, Associate General Counsel, or Ernesto A. Lanza, Senior Associate General Counsel.
May 25, 2007