Amendments Filed with the SEC to Require Dealers to Report Their Consultant's Political Contributions and Payments to Political Parties

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Amendments Filed with the SEC to Require Dealers to Report Their Consultant's Political Contributions and Payments to Political Parties

On June 16, 1998, the Board filed with the Securities and Exchange Commission ("SEC") proposed amendments to rules G-38 and G-8, and revisions to the attachment page to Form G-37/G-38, to require dealers to obtain from their consultants information on the consultants' political contributions and payments to state and local political parties and for dealers to report such information to the Board on Form G-37/G-38.⁽¹⁾ The Board has requested that the SEC delay the effectiveness of the proposed amendments until October 1, 1998, in order to provide time for dealers to revise their contracts with their consultants and to put supervisory procedures in place for compliance with the proposed rule change.

BACKGROUND

Rule G-37, among other things, prohibits a dealer from engaging in municipal securities business with an issuer within two years after certain contributions to an official of such issuer made by the dealer, any municipal finance professional associated with such dealer, or any political action committee ("PAC") controlled by the dealer or any municipal finance professional. Rule G-37(d) prohibits a dealer and any municipal finance professional from doing any act indirectly which would result in a violation of the rule if done directly by the dealer or municipal finance professional. Thus, a dealer would violate rule G-37 by engaging in municipal securities business with an issuer after directing any person to make a contribution to an official of such issuer. Because indirect activities are often difficult to prove, the Board believed that additional information about consultant arrangements should be made available to issuers and the public in order to maintain the integrity of the market. Accordingly, the Board adopted rule G-38.

Rule G-38 requires dealers who use consultants⁽²⁾ to evidence the consulting arrangement in writing (referred to as a "Consultant Agreement").⁽³⁾ Rule G-38(c) requires each dealer to disclose to an issuer with which it is engaging or seeking to engage in municipal securities business, in writing, information on consulting arrangements relating to such issuer. The written disclosure must include, at a minimum, the name, company, role and compensation arrangement with the consultant or consultants. Dealers are required to make such written disclosures prior to the issuer's selection of any dealer in connection with the municipal securities business being sought, regardless of whether the dealer making the disclosure ultimately is the one to obtain or retain that business.⁽⁴⁾ Rule G-38(d) requires dealers to submit to the Board, on a quarterly basis, reports of all consultants used by the dealer.⁽⁵⁾ For each consultant, dealers must report the consultant's name, company, role and compensation arrangement, as well as the dollar amount of any payment made to the consultant during the quarterly reporting period.⁽⁶⁾

As mentioned above, one of the reasons the Board adopted rule G-38 was because of its concern that dealers might be circumventing rule G-37 by using consultants to make political contributions. There also was concern about dealers hiring consultants who had made their own contributions to issuer officials.⁽⁷⁾ The rule G-38 reporting and recordkeeping requirements seek to make information public about the consultants that dealers have hired and the municipal securities business obtained through such consultants. One reason the Board sought this public disclosure was so that reporters and others could investigate further whether there was a connection between contributions given by consultants and the business they obtained for the dealers that hired them. The Board determined to adopt the proposed rule change to rule G-38 because of concern that, given the increased enforcement of rule G-37, more dealers may seek to circumvent rule G-37 by hiring consultants who make substantial contributions to issuer officials.

SUMMARY OF PROPOSED AMENDMENTS

The proposed amendments would require a dealer to receive and report certain contribution and payment information from the consultant; any partner, director, officer or employee of the consultant who communicates with an issuer to obtain municipal securities business on behalf of the dealer; and any PAC controlled by the consultant or any partner, director, officer or employee of the consultant who communicates with issuers to obtain municipal securities business on behalf of the dealer.⁽⁸⁾ A dealer would be required to include within its Consultant Agreement a statement that the consultant agrees to provide the dealer each calendar quarter with a listing of reportable political contributions to official(s) of an issuer and reportable payments to political parties of states and political subdivisions during such quarter.⁽⁹⁾

The proposed amendments would require a dealer to obtain information from its consultants about the contributions made to issuer officials only if the consultant has had direct or indirect communication with such issuer to obtain municipal securities business on behalf of the dealer.⁽¹⁰⁾ The political party payments required to be reported are limited to those made to political parties of states and political subdivisions that operate within the geographic area of the issuer with whom the consultant communicates on behalf of the dealer (e.g., city, county and state parties). The date that establishes the obligation for the collection of contribution information is the date of the consultant's communication with the issuer to obtain municipal securities business on behalf of the dealer.

With respect to the collection of contribution and payment information, the proposed amendments contain a six-month "look-back" provision and as well as a six-month "look-forward" provision from the date of communication with an issuer. Thus, a consultant must disclose to the dealer the contributions and payments made by the consultant during the six months prior to the date of the consultant's communication with the issuer.⁽¹¹⁾ So too, if the consultant's communication with an issuer continues, any reportable contributions and payments would be required to be disclosed. Once communication ceases, the consultant still must disclose contribution and payment information for six months.⁽¹²⁾ The Board believes these provisions are important in providing information for a minimum period of one year about any consultant contributions to officials of an issuer with whom the consultant communicated on behalf of a dealer to obtain municipal securities business. This should help to identify any situations in which contributions could have influenced the awarding of municipal securities business. The proposed amendments would require dealers to keep records under rule G-8 of contributions and payments by their consultants, the consultant's company, and/or any PAC controlled by the consultant or the consultant's company.⁽¹³⁾

A dealer's requirement to collect contribution and payment information from its consultants ends when a Consultant Agreement has been terminated.⁽¹⁴⁾ Of course, dealers should not attempt to avoid the requirements of rule G-38 by terminating a consultant relationship after directing or soliciting the consultant to make a political contribution to an issuer official after such termination. Rule G-37(d) prohibits a dealer from doing any act indirectly which would result in a violation of rule G-37 if done directly by the dealer. Thus, a dealer may violate rule G-37 by engaging in municipal securities business with an issuer after directing or soliciting any person to make a contribution to an official of such issuer.

The proposed amendments would require that the information obtained by dealers concerning their consultants' contributions and payments be submitted by dealers to the Board on Form G-37/G-38.⁽¹⁵⁾ The disclosures required by the proposed amendments are reflected in the draft changes to Form G-37/G-38. The draft changes require dealers to disclose on the attachment sheet for each consultant used by the dealer the contributions and payments covered by the rule. When completing a form, a dealer must disclose, in addition to the other required information, the calendar quarter and year of any reportable political contributions and reportable political party payments that were made prior to the calendar quarter of the form being completed.⁽¹⁶⁾ Once a contribution or payment has been disclosed on a report, a dealer should not continue to disclose that particular contribution or payment on subsequent reports. Thus, "look-back" contributions should be disclosed once the consultant has communication with an issuer to obtain municipal securities business on behalf of a dealer. Form G-37/G-38 also has been revised to require dealers to separately identify all of the municipal securities business obtained or retained by the consultant for the dealer.⁽¹⁷⁾

The proposed amendments include a "reasonable efforts" defense by noting that a dealer will not violate rule G-38 if it fails to receive from its consultant all required contribution and payment information and thus fails to report such information to the Board if the dealer can demonstrate that it used reasonable efforts in attempting to obtain the necessary information. The proposed amendments state that "reasonable efforts" include having a dealer: (1) state in its Consultant Agreement that Board rules require disclosure of consultant contributions and payments; and (2) send quarterly reminders to its consultants of the deadline for their submissions to the dealer of contribution and payment information. While the Board does not believe dealers have a duty to investigate whether the contribution and payment information provided is accurate or complete, the Board would expect a dealer to vigorously enforce its contract with a consultant if the dealer becomes aware that the consultant is not providing it with materially complete or accurate information concerning contributions and payments on a timely basis.

Finally, the Board is very concerned about consultants making contributions in order to obtain municipal securities business on behalf of the dealer and, while the Board at this time is only requiring disclosure of consultants' political contributions and payments to state and local political parties, it will be paying close attention to this issue. The Board will take whatever further steps it feels are necessary to sever the connection between the giving of political contributions and the awarding of municipal securities business.

SUMMARY OF COMMENTS

In September 1997, the Board published a notice that proposed for comment draft amendments to rules G-38 and G-8 and revisions to Form G-37/G-38 that would require dealers to disclose their consultants' political contributions to officials of an issuer and payments to state and local political parties.⁽¹⁸⁾ In response to its request for comments, the Board received three comment letters addressing the draft amendments.

Payments to State and Local Political Parties

Two commentators recommended that the draft amendments be modified to make clear that only those contributions to state and local political parties operating within the jurisdiction of the issuer which is the subject of the Consultant Agreement must be reported. One commentator stated that the reporting of all contributions to state and local political parties by consultants (except for the $250 de minimis) "would impose an unfair burden on all dealers employing consultants to monitor and report on all contributions to state and local political parties by independent third party market participants even though there was no nexus or other reasonable relationship between those political parties and the purpose of employing the consultant." The other commentator stated that requiring a dealer to "monitor and report all political contributions to state and local parties by a consultant and their corporate PAC, even when there is no relationship between the political party and the purpose of employing the consultant, is time consuming."

The Board determined to revise the draft amendments to limit the political party contributions required to be reported to those made to political parties of states and political subdivisions that operate within the geographic area of the issuer with whom the consultant communicates on behalf of the dealer.⁽¹⁹⁾ This is consistent with the requirements for reporting contributions.

Consultant's Business Address

One commentator suggested that rule G-38 require disclosure of the address and telephone number of the consultant or (when applicable) the address and telephone number of the consultant's company. It noted that such information would help in contacting consultants to ask questions about connections between contributions and business and in checking campaign finance reports. It also noted that this information helps to avoid confusion with other people who have the same name as the consultant. Finally, it noted that Federal Election Commission ("FEC") regulations require the address of any contributor of $200 or more as one of the items that must be reported by political committees.

The Board revised the draft amendments to rule G-38 to require that the consultant's business address be reported on Form G-37/G-38.⁽²⁰⁾ This requirement is similar to FEC regulations. Including the address would be helpful for anyone trying to contact the consultant to inquire about contributions or any other consultant information contained on Form G-37/G-38. The Board believes that requiring dealers to include consultants' telephone numbers could lead to unnecessary calls to the consultant; however, by requiring that the disclosure of addresses for consultants, anyone wishing to call a consultant should be able to obtain the telephone number.

Additional Time for Reporting Consultants' Contributions and Payments

Two commentators recommended that the draft amendments to rule G-8 be modified to allow for more time in which to report the information received from consultants pursuant to rule G-38. One commentator stated that, "[i]n order to meet the 30-day deadline, dealers would have to impose a much earlier deadline on their consultants, which would give consultants less time to collect the information and transmit it to the dealers . . . This lack of time would make it extremely difficult, and perhaps impossible, for dealers to collect all the required information for reporting in the time allowed." These commentators stated that it would be more appropriate to require consultant contributions to be included in the report filed for the quarter following the making of any political contributions. One commentator stated that "[t]he additional 90 days would allow dealers to ensure that all of the consultants have reported and that the filed G-37/G-38 forms are completed properly."

The Board understands why dealers would wish more time to report their consultants' contributions and payments. However, the Board is concerned that industry participants could view this delay of up to six months in reports of consultant contributions and payments as a weakening of the rule. Thus, the Board determined not to grant additional time to report consultant contributions and payments.

Good Faith Defense

Two commentators stated that dealers should not be required to guarantee the accuracy of the information they obtain from their consultants and one of these commentators stated that dealers should not "be expected to conduct any investigation into the accuracy or completeness of the information provided to them." One commentator recommended that rule G-38 "include language which will afford dealers confidence that they may in good faith rely upon the information they receive from their consultants in submitting their reports."

The Board believes it is reasonable to allow dealers to rely in good faith on their consultants' reports and that it would be almost impossible for dealers to investigate for contributions made by their consultants that were not reported. The proposed amendments state that a dealer will not violate rule G-38 if it fails to receive from its consultant all required contribution and payment information and thus fails to report such information to the Board if the dealer can demonstrate that it used reasonable efforts in attempting to obtain the necessary information. The FEC has similar requirements for reporting of contribution information by various entities. The proposed amendments state that "reasonable efforts" include having a dealer: (1) state in the Consultant Agreement that Board rules require disclosure of consultant contributions and payments, and (2) send quarterly reminders to consultants of the deadline for their submissions to the dealer of contribution and payment information. While the Board does not believe dealers have a duty to investigate whether the contribution and payment information provided is accurate or complete, the Board would expect a dealer to vigorously enforce its contract with a consultant if the dealer becomes aware that the consultant is not providing it with materially complete or accurate information concerning contributions and payments on a timely basis.

June 16, 1998

Text of Proposed Amendments⁽²¹⁾

Rule G-38. Consultants

(a) Definitions.

(i)-(v) No change.

(vi) The term "reportable political contribution" means:

(A) if the consultant has had direct or indirect communication with an issuer on behalf of the broker, dealer or municipal securities dealer to obtain or retain municipal securities business for such broker, dealer or municipal securities dealer, a political contribution to an official(s) of such issuer made by any contributor referred to in paragraph (b)(i) during the period beginning six months prior to such communication and ending six months after such communication;

(B) the term does not include those political contributions to official(s) of an issuer made by any individual referred to in subparagraphs (b)(i)(A) or (B) of this rule who is entitled to vote for such official if the contributions made by such individual, in total, are not in excess of $250 to any official of such issuer, per election.

(vii) The term "reportable political party payment" means:

(A) if a political party of a state or political subdivision operates within the geographic area of an issuer with which the consultant has had direct or indirect communication to obtain or retain municipal securities business on behalf of the broker, dealer or municipal securities dealer, a payment to such party made by any contributor referred to in paragraph (b)(i) during the period beginning six months prior to such communication and ending six months after such communication;

(B) the term does not include those payments to political parties of a state or political subdivision made by any individual referred to in subparagraphs (b)(i)(A) or (B) of this rule who is entitled to vote in such state or political subdivision if the payments made by such individual, in total, are not in excess of $250 per political party, per year.

(viii) The term "official of such issuer" or "official of an issuer" shall have the same meaning as in rule G-37(g)(vi).

(b) Written Agreement

(i) Each broker, dealer or municipal securities dealer that uses a consultant shall evidence the consulting arrangement by a writing setting forth, at a minimum, the name, company, business address, role and compensation arrangement of each such consultant ("Consultant Agreement"). In addition, the Consultant Agreement shall include a statement that the consultant agrees to provide the broker, dealer or municipal securities dealer with a list by contributor category, in writing, of any reportable political contributions and any reportable political party payments during each calendar quarter made by:

(A) the consultant;

(B) any partner, director, officer or employee of the consultant who communicates

with an issuer to obtain municipal securities business on behalf of the broker, dealer or municipal securities dealer; and

(C) any political action committee controlled by the consultant or any partner, director, officer or employee of the consultant who communicates with an issuer to obtain municipal securities business on behalf of the broker, dealer or municipal securities dealer.

(ii) The Consultant Agreement shall require that the consultant provide the reportable

political contributions and political party payments for each calendar quarter to the broker, dealer or municipal securities dealer in sufficient time for the broker, dealer or municipal securities dealer to meet its reporting obligations under paragraph (e) of this rule.

(iii) [Such] The Consultant Agreement must be entered into before the consultant engages in any direct or indirect communication with an issuer on behalf of the broker, dealer or municipal securities dealer.

(c) Information Concerning Political Contributions to Official(s) of an Issuer and Payments to State and Local Political Parties made by Consultants.

(i) A broker, dealer or municipal securities dealer is required to obtain information on its

consultant's reportable political contributions and reportable political party payments beginning with a consultant's first direct or indirect communication with an issuer on behalf of the broker, dealer or municipal securities dealer to obtain or retain municipal securities business for such broker, dealer or municipal securities dealer. The broker, dealer or municipal securities dealer shall obtain from the consultant the information concerning each reportable political contribution required to be recorded pursuant to rule G-8(a)(xviii)(F) and each reportable political party payment required to be recorded pursuant to rule G-8(a)(xviii)(G).

(ii) The requirement to obtain the information referred to in paragraph (c)(i) of this

rule shall end upon the termination of the Consultant Agreement.

(iii) A broker, dealer or municipal securities dealer will not violate this section if it fails

to receive from its consultant all required information on reportable political contributions and reportable political party payments and thus fails to report such information to the Board if the broker, dealer or municipal securities dealer can demonstrate that it used reasonable efforts in attempting to obtain the necessary information. Reasonable efforts shall include:

(A) a statement in the Consultant Agreement that Board rules require disclosure of

consultant contributions to issuer officials and payments to state and local political parties; and

(B) the broker, dealer or municipal securities dealer sending quarterly reminders

to its consultants of the deadline for their submissions to the broker, dealer or municipal securities dealer of the information concerning their reportable political contributions and reportable political party payments.

(d) Disclosure to Issuers. Each broker, dealer or municipal securities dealer shall submit in writing to each issuer with which the broker, dealer or municipal securities dealer is engaging or is seeking to engage in municipal securities business, information on consulting arrangements relating to such issuer, which information shall include the name, company, business address, role and compensation arrangement of any consultant used, directly or indirectly, by the broker, dealer or municipal securities dealer to attempt to obtain or retain municipal securities business with each such issuer. Such information shall be submitted to the issuer prior to the selection of any broker, dealer or municipal securities dealer in connection with such municipal securities business.

[(d)] (e) Disclosure to Board. Each broker, dealer and municipal securities dealer shall send to the Board by certified or registered mail, or some other equally prompt means that provides a record of sending, and the Board shall make public, reports of all consultants used by the broker, dealer or municipal securities dealer during each calendar quarter. Two copies of the reports must be sent to the Board on Form G-37/G-38 by the last day of the month following the end of each calendar quarter (these dates correspond to January 31, April 30, July 31, and October 31). Such reports shall include, for each consultant, in the prescribed format, the consultant's name, company, business address, role, [and] compensation arrangement, any municipal securities business obtained or retained by the consultant with each such business listed separately, and, if applicable, dollar amounts paid to the consultant connected with particular municipal securities business. [In addition, s] Such reports shall indicate the total dollar amount of payments made to each consultant during the report period [and, if any such payments are related to the consultant's efforts on behalf of the broker, dealer or municipal securities dealer which resulted in particular municipal securities business, then that business and the related dollar amount of the payment must be separately identified]. In addition, such reports shall include the following information to the extent required to be obtained during such calendar quarter pursuant to paragraph (c)(i) of this rule:

(i) the name and title (including any city/county/state or political subdivision) of each official of an issuer and political party receiving reportable political contributions or reportable political party payments, listed by state; and

(ii) contribution or payment amounts made and the contributor category of the persons and entities described in paragraphs (b)(i) of this rule.

Once a contribution or payment has been disclosed on a report, the dealer should not continue to disclose that particular contribution or payment on subsequent reports.

Rule G-8. Books and Records to be Made by Brokers, Dealers and Municipal Securities Dealers

(a) Description of Books and Records Required 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) - (xvii) No change.

(xviii) Records Concerning Consultants Pursuant to Rule G-38. Each broker, dealer and municipal securities dealer shall maintain:

[(i)] (A) a listing of the name, company, business address, role and compensation arrangement of each consultant;

[(ii)] (B) a copy of each Consultant Agreement referred to in rule G-38(b);

[(iii)] (C) a listing of the compensation paid in connection with each such Consultant Agreement;

[(iv)] (D) where applicable, a listing of the municipal securities business obtained or retained through the activities of each consultant;

[(v)] (E) a listing of issuers and a record of disclosures made to such issuers, pursuant to rule G-38[(c)] (d), concerning each consultant used by the broker, dealer or municipal securities dealer to obtain or retain municipal securities business with each such issuer; [and]

[(vi)] (F) records of each reportable political contribution (as defined in rule G-38(a)(vi)), which records shall include:

(1) the names, city/county and state of residence of contributors;

(2) the names and titles (including any city/county/state or other political subdivision) of the recipients of such contributions; and

(3) the amounts and dates of such contributions;

(G) records of each reportable political party payment (as defined in rule G-38(a)(vii)), which records shall include:

(1) the names, city/county and state of residence of contributors;

(2) the names and titles (including any city/county/state or other political subdivision) of the recipients of such payments; and

(3) the amounts and dates of such payments; and

(H) the date of termination of any consultant arrangement.

(xix) No change.

(b) - (f) No change.

ENDNOTES

1. File No. SR-MSRB-98-8. Comments submitted to the SEC should refer to this file number.

2. Rule G-38(a)(i) defines the term "consultant" as any person used by a dealer to obtain or retain municipal securities business through direct or indirect communication by such person with an issuer on the dealer's behalf where the communication is undertaken by such person in exchange for, or with the understanding of receiving, payment from the dealer or any other person.

3. Rule G-38 requires that the Consultant Agreement, at a minimum, include the name, company, role and compensation arrangement of each consultant used by the dealer. The Consultant Agreement must be entered into before a consultant engages in any direct or indirect communication with an issuer on the dealer's behalf.

4. The Board has filed with the SEC a proposed rule change that would give dealers the option of disclosing information on their consulting arrangements to issuers on either an issue-specific or issuer-specific basis. See SR-MSRB-97-9.

5. Such reports must be filed on Form G-37/G-38.

6. In addition, if any payment made during the reporting period is related to the consultant's efforts on behalf of the dealer which resulted in particular municipal securities business, whether the municipal securities business was completed during that or a prior reporting period, then the dealer must separately identify that business and the dollar amount of the payment.

7. In October 1993, at the urging of SEC Chairman Arthur Levitt, 19 major dealers agreed to a Statement of Initiative ("Initiative") to support the principle that political contributions which are intended to influence the awarding of municipal securities should be prohibited. Within a few months, another 36 dealers "signed on" to the Initiative. Interpretation No. 1 was issued on December 6, 1993, and, among other things, provides requirements for a dealer that uses a consultant to obtain or retain municipal securities business. This interpretation requires, among other things, that a dealer have a written agreement with the consultant and that such agreement prohibit the consultant, its officers, directors, partners, and non-clerical employees from making any political contributions or other payments, directly or indirectly, for the purposes of obtaining or retaining municipal securities business.

8. A "consultant" in rule G-38 can refer to an individual or a company (e.g., a bank affiliated with a bank dealer). For example, if an individual is a consultant, this individual would report to the dealer only his or her contributions and payments and the contributions of any PAC controlled by such individual. If the consultant is a company, the company would report its contributions and payments to the dealer, as well as those made by any partner, director, officer or employee of the consultant who communicates with issuers to obtain municipal securities business on behalf of the dealer, and any PAC controlled by the consultant or any partner, director, officer or employee of the consultant who communicates with issuers to obtain municipal securities business on behalf of the dealer.

9. The de minimis exception for contributions to official(s) of an issuer provides that a consultant need not provide to a dealer information about contributions made by any partner, director, officer or employee of the consultant who communicates with issuers to obtain municipal securities business on behalf of the dealer to any official of an issuer for whom such individual is entitled to vote if such individual's contributions, in total, are not in excess of $250 to each official of such issuer, per election. Similarly, the de minimis exception for payments provides that a consultant need not provide to a dealer information about payments to political parties of a state or political subdivision made by any partner, director, officer or employee of the consultant who communicates with issuers to obtain municipal securities business on behalf of the dealer who is entitled to vote in such state or political subdivision if the payments by the individual, in total, are not in excess of $250 per political party, per year.

10. A dealer must disclose contributions with respect to those issuers from which a consultant is seeking municipal securities business on behalf of the dealer, regardless of whether contributions are going to and communications are occurring with the same or different personnel within that particular issuer.

11. Such contributions and payments become reportable in the calendar quarter in which the consultant first communicates with the issuer.

12. Contributions and payments made simultaneously with or after the consultant's first communication with the issuer are reportable in the calendar quarter in which they are made.

13. For example, if the amendments to rule G-38 become effective on October 1, 1998, on the reports for the fourth quarter of 1998 (required to be sent to the Board by January 31, 1999) dealers would be required to disclose their consultants' reportable political contributions and reportable political party payments for the fourth quarter of 1998 and include, pursuant to the six-month look-back, reportable political contributions and reportable political party payments since April 1, 1998.

14. A dealer that terminates a Consultant Agreement would of course be obligated to obtain information regarding contributions and payments made up to the date of termination.

15. The proposed amendments also require dealers to report the consultant's business address on Form G-37/G-38.

16. The definitions of "reportable political contribution" in rule G-38(a)(vi) and "reportable political party payment" in rule G-38(a)(vii) include those contributions and payments made during the period six months prior to communication with an issuer. (The definitions also include contributions and payments made six months after such communication). Rule G-38(e) requires that reportable political contributions and reportable political party payments be disclosed to the Board on Form G-37/G-38.

17. The existing version of the form requires dealers to list only the municipal securities business obtained or retained by the consultant in which the consultant was paid a specific dollar amount for the particular municipal securities business.

18. "Disclosure of Consultants' Political Contributions and Payments," MSRB Reports, Vol. 17, No. 3 (October 1997) at 3-7.

19. The proposed amendments contain a de minimis exception from the reporting of consultants' payments to political parties in which such consultant is entitled to vote if the payments are not in excess of $250 per political party, per year.

20. Rule G-8(a)(xviii) was also amended to require a dealer to maintain a record of a consultant's business address.

21. Underlining indicates new language; brackets denote deletions.

View Attachment to form G-38.

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