SEC Approves New Rule G-40 and Form G-40 on Electronic Mail Contacts
On June 6, 2002, the SEC approved new MSRB Rule G-40, on electronic mail (“E-mail”) contacts, and new Form G-40, as well as related amendments to Rule G-8, on books and records, and Rule G-9, on preservation of records.[1] The new rule requires each broker, dealer and municipal securities dealer to use new Form G-40 to appoint an E-mail contact to serve as the official contact person for purposes of electronic communication between the dealer and the MSRB. The E-mail contact must be a registered municipal securities principal with the dealer.
The MSRB is in the process of sending to its current list of dealers a copy of Form G-40 with instructions for submitting the form.[2] PLEASE DO NOT SUBMIT FORMS TO THE MSRB UNTIL YOU RECEIVE A LETTER REQUESTING YOU TO DO SO.
Rule G-40 will become operative on September 4, 2002.
SUMMARY OF NEW RULE G-40
The events of September 11th, as well as the weeks that followed, emphasized the importance of, and need for, a formalized business continuity plan that includes an efficient and reliable means of official communication between regulators and the industry. Establishing a reliable method for electronic communication is needed to allow the MSRB to efficiently alert dealers to official communications, including time-sensitive developments, rule changes, notices, etc., and will facilitate dealers’ internal distribution of such information. In addition, the MSRB has discontinued publication of MSRB Reports. MSRB notices now will be available exclusively on its web site at www.msrb.org. Rule G-40 will ensure that such notices and other MSRB communications continue to reach each dealer.
Paragraph (a) of Rule G-40 requires that each dealer appoint an “Electronic Mail Contact” to serve as its official contact person for purposes of communicating with the MSRB, and that such person be a registered municipal securities principal of the dealer. Paragraph (b) requires that each dealer, upon completion of its Rule A-12 submissions and assignment of an MSRB Registration Number, submit by mail to the MSRB a completed Form G-40 setting forth the dealer’s name, date, MSRB Registration Number, name of its E-mail contact and his/her e-mail address, telephone number and Individual Central Registration Depository (CRD) Number, and the name, title, signature and telephone number of the person who prepared the Form G-40. [3] Paragraph (b) also provides that the dealer may change its E-mail contact or other information previously submitted by sending an amended Form G-40 to the MSRB by e-mail. Paragraph (c) requires each dealer to update information on its E-mail contact as periodically requested and prescribed by the MSRB and to submit such information to the MSRB by e-mail.
As noted above, the SEC also approved amendments to Rule G-8, on books and records, to require that dealers maintain records reflecting copies of Form G-40 and any amended forms, as required by Rule G-40, as well as amendments to Rule G-9, on preservation of records, to require that dealers retain these records for a period of three years.
June 12, 2002
TEXT OF NEW RULE G-40 [4]
Rule G-40. Electronic Mail Contacts.
(a) Each broker, dealer or municipal securities dealer shall appoint an Electronic Mail Contact to serve as the official contact person for purposes of electronic mail communication between the broker, dealer or municipal securities dealer and the MSRB. Each Electronic Mail Contact shall be a registered municipal securities principal of the broker, dealer or municipal securities dealer.
(b)(i) Upon completion of its Rule A-12 submissions and assignment of an MSRB Registration Number, each broker, dealer or municipal securities dealer shall submit to the MSRB by mail a completed Form G-40 setting forth, in the prescribed format, the following information:
(A) The name of the broker, dealer or municipal securities dealer, and the date.
(B) The MSRB Registration Number of the broker, dealer or municipal securities dealer.
(C) The name of the Electronic Mail Contact, and his/her electronic mail address, telephone number and Individual Central Registration Depository (CRD) Number.
(D) The name, title, signature and telephone number of the person who prepared the form.
(ii) A broker, dealer or municipal securities dealer may change the name of its Electronic Mail Contact or other information previously provided by electronically submitting to the MSRB an amended Form G-40.
(c) Each broker, dealer or municipal securities dealer shall update information on its Electronic Mail Contact periodically as requested and prescribed by the MSRB and shall submit such information electronically to the MSRB.
Rule G-8. Books and Records to be Made by Brokers, Dealers and Municipal Securities Dealers
(a) Description of Books and Records to be Made. Except as otherwise specifically indicated in this rule, every broker, dealer and municipal securities dealer shall make and keep current the following books and records, to the extent applicable to the business of such broker, dealer or municipal securities dealer:
(i)–(xxi) No change.
(xxii) Records Concerning Electronic Mail Contacts. Records reflecting copies of Form G-40 and any amended forms, as required by Rule G-40.
(b) – (e) No change.
(f) Compliance with Rule 17a-3. Brokers, dealers and municipal securities dealers other than bank dealers which are in compliance with rule 17a-3 of the Commission will be deemed to be in compliance with the requirements of the rule, provided that the information required by subparagraph (a)(iv)(D) of this rule as it relates to uncompleted transactions involving customers; paragraph (a)(viii); and paragraphs (a)(ix) through (a)(xxi) (xxii) shall in any event be maintained.
(g) No change.
Rule G-9. Preservation of Records
(a) No change.
(b) Records to be Preserved for Three Years. Every broker, dealer and municipal securities dealer shall preserve the following records for a period of not less that three years:
(i)–(xiii) No change.
(xiv) the records to be maintained pursuant to rule G-8(a)(xx); and
(xv) the records to be maintained pursuant to rule G-8(a)(xxi) . ;and
(xvi) the records to be maintained pursuant to rule G-8(a)(xxii).
(c) - (g) No change.
Form G-40
ELECTRONIC MAIL CONTACT
MSRB Registration Number
_____________________________
Name of Dealer: _________________________________________________________
Date: __________________________________________________________________
The dealer named above designates (name) ____________________________________ as its Electronic Mail Contact for purposes of electronic communications with the MSRB. This contact person is a registered municipal securities principal with the dealer.
E-Mail Address of Contact: _________________________________________________
Phone Number of Contact: __________________________________________________
Individual CRD Number of Contact (NASD member firms only): ___________________
(Optional): The dealer named above designates (name) ___________________________
as its second Electronic Mail Contact. This contact person is a registered municipal securities principal with the dealer.
E-mail Address of Second Designee: _________________________________________
Phone Number of Second Designee: __________________________________________
Individual CRD Number of Second Designee (NASD member firms only): ___________
Name and title of person preparing this Form:___________________________________
Signature: _______________________________________________________________
Telephone number: _______________________________________________________
NEW FORMS MUST BE MAILED TO:
MSRB
1900 Duke Street, Suite 600
Alexandria, VA 22314
TO SUBMIT AMENDED FORMS & UPDATES ELECTRONICALLY TO MSRB, PLEASE CALL (703) 797-6600.
[1] Securities Exchange Act Release No. 46043 (June 6, 2002).
[2] Any new dealer will be required to submit its initial Form G-40 by mail when the dealer completes its Rule A-12 submissions. Rule A-12, on initial fee, requires each dealer, prior to effecting any transaction in or inducing or attempting to induce the purchase or sale of any municipal security, to pay to the MSRB an initial fee of $100, accompanied by a written statement setting forth the dealer’s name, address and SEC registration number.
[3] The MSRB will assign passwords in order to limit access to each dealer’s Form G-40 and to maintain the integrity of the information contained therein. Therefore, each dealer will be required to submit its initial Form G-40 by mail. The MSRB will then issue a password to the designated E-mail Contact that will be used to electronically submit to the MSRB any required updates and amendments to the form.
[4] Underlining indicates new language; strikethroughs indicate deletions.
