FOR IMMEDIATE RELEASE						2001-28

       SEC SENDS LETTER TO HEADS OF SIGNATORIES TO THE 1993 VOLUNTARY
       INITIATIVE ON POLITICAL CONTRIBUTIONS BY MUNICIPAL SECURITIES
                                                     MARKET PARTICIPANTS

	Washington, DC, March 15, 2001 - Today the Commission released the following text 
of a letter sent by Acting Chairman Laura S. Unger to heads of municipal securities firms
concerning a 1993 voluntary initiative on political contributions by municipal securities market
participants.

Dear __________: 

	Recently, questions have been raised by various municipal securities market participants
about the continued relevance of the Statement of Initiative Regarding Political Contributions to
State and Local Officials/Candidates (the "Voluntary Initiative") in light of the implementation
of MSRB Rules G-37 and G-38.  Furthermore, we understand that while most firms that initially
agreed to adhere to the Voluntary Initiative continue to do so, some do not, considering it to have
been superceded by Rules G-37 and G-38.  As a result, the Commission believes it appropriate to
clarify our position at this time.

	In response to a call by Chairman Levitt to eliminate so called "pay-to-play" practices in
the public finance industry, 42 municipal securities firms, including yours, entered into the
Voluntary Initiative in 1993 to curb those practices.  The Voluntary Initiative imposed a number
of prohibitions upon making or soliciting political contributions at the state and local levels on
the participating municipal securities firms, their political action committees, municipal finance
professionals, and senior management.  Although Rules G-37 and G-38 do not impose a ban on
political contributions, instead requiring disclosure of political contributions and prohibiting
participation in municipal securities business that could be influenced by particular contributions
for two years, the effect of MSRB Rules G-37 and G-38 are substantially similar overall to that
of the Voluntary Initiative.   

The Voluntary Initiative was a very effective first step in the elimination of pay-to-play
practices in the municipal securities market.  However, now that the MSRB has developed a
regulatory scheme designed to ensure that pay-to-play practices do not occur and the
NASD has undertaken enforcement actions when necessary, the Voluntary Initiative is no
longer needed. Compliance with both the MSRB rules and the Voluntary Initiative
imposes unnecessary record-keeping and other requirements.  The Voluntary Initiative
has served its purpose; the Commission no longer expects firms to adhere to its terms. 

We caution you against reading this as an indication that the Commission is backing
away from its commitment to eliminate pay-to-play practices.  Be assured that the
Commission's commitment to ensuring the integrity of the municipal securities market
remains unabated.

The Commission appreciates the efforts of your firm and the other signatories to the
Voluntary Initiative to uphold the integrity of the municipal securities markets.  I
commend you for entering into the Voluntary Initiative and acting in the best interests of
the public finance industry.

					Sincerely,

					Laura S. Unger
					Acting Chairman

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