Technical Revisions of Rule G-37 Qs & As

            On January 20, 2010, the Securities and Exchange Commission approved amendments to Rule G-37, on political contributions and prohibitions on municipal securities business and Rule G-8, on books and records to be made by brokers, dealers and municipal securities dealers (“dealers”).[1]   As approved, the amendments to Rule G-37 will require the public disclosure of certain contributions to bond ballot campaigns made by dealers, municipal finance professionals (“MFPs”), their political action committees (“PACs”) and non-MFP executive officers on MSRB Form G-37.

            The adoption of these amendments to Rule G-37 necessitates minor revisions to the MSRB’s Qs & As on Rule G-37.  The MSRB filed those revisions with the Securities and Exchange Commission on February 25, 2010.[2]  The revisions became effective upon filing.

February 26, 2010

Revised Rule G-37 Qs & As[3]

IV.4

Q: Are contributions to bond election committees supporting ballot measures for bonds and tax levies ballot campaigns subject to the requirements of Rule G-37. 

A:  No.  Such political contributions are subject to the disclosure requirements of Rule G-37(e) (other than contributions made by a municipal finance professional or a non-MFP executive officer to a bond ballot campaign for a ballot initiative with respect to which such person is entitled to vote if all contributions by such person to such bond ballot campaign, in total, do not exceed $250 per ballot initiative).  Although such contributions will not result in a ban on municipal securities business under Rule G-37(b), as with all MSRB rules, failure to comply with requirements of the rule (i.e., by failing to disclose such contributions) may subject dealers to fines and other disciplinary actions by the Securities and Exchange Commission, Financial Industry Regulatory Authority, or other appropriate regulatory agencies.

(May 24, 1994, revised February 25, 2010)

VI.6

Q:  Which contributions to officials of issuers and political parties of states and political subdivisions must be disclosed to the Board on Form G-37/G-38?

A: Those contributions which are required to be recorded pursuant to rule G-8(a)(xvi). These include (i) the contributions, direct or indirect, to officials of an issuer and to political parties of states and political subdivisions made by the dealer and each PAC controlled by the dealer (or controlled by any municipal finance professional of such dealer); (ii) the contributions, direct or indirect, to officials of an issuer made by each municipal finance professional and non-MFP executive officer, however, such records need not reflect any contribution made by a municipal finance professional or non-MFP executive officer to officials of an issuer for whom such person is entitled to vote if the contributions by each such person, in total, are not in excess of $250 to any official of an issuer, per election; and (iii) the contributions, direct or indirect, to political parties of states and political subdivisions made by all municipal finance professionals and non-MFP executive officers, however, such records need not reflect those contributions made by any municipal finance professional or non-MFP executive officer to a political party of a state or political subdivision in which such persons are entitled to vote if the contributions by each such person, in total, are not in excess of $250 per political party, per year;  (iv) the contributions, direct or indirect, to bond ballot campaigns made by the dealer and each PAC controlled by the dealer (or controlled by any municipal finance professional of such dealer); and (v) the contributions, direct or indirect, to bond ballot campaigns made by each municipal finance professional and non-MFP executive officer, however, such records need not reflect any contributions made by a municipal finance professional or non-MFP executive officer to a bond ballot campaign for a ballot initiative with respect to which such person is entitled to vote if the contributions by such person, in total, are not in excess of $250 to any bond ballot campaign, per ballot initiative.

(May 24, 1994, revised February 25, 2010)