Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Notices 39639

10 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 42374

(February 2, 2000), 65 FR 6427 (February 9, 2000).

4Originally, Rule G–36 applied to all primary

offerings subject to Rule 15c2–12, as well as to

Small Issue Securities for which an official

statement in final form was prepared, bud did not

apply to Limited Offering Securities, Short-Term

Securities and Puttable Securities.

5See Securities Exchange Act Release No. 32086

(March 31, 1993), 58 FR 18290 (April 8, 1993);

‘‘Delivery of Official Statements to the Board: Rule

G–36,’’ MSRB Reports, Vol. 12, No. 3 (September

1992) at 11. Thus, only primary offerings exempt

from Rule 15c2–12 for which no official statement

in final form is prepared and Limited Offering

Securities remain exempt from Rule G–36.

Currently, Small Issue Securities, Short-Term

Securities, and Puttable Securities, are subject to

Rule G–36(c)(1) where an official statement in final

form has been prepared by or on behalf of the

issuer.

6 In contrast, Rule G–36(c)(i) currently requires

that the underwriter send the official statement to

the Board by the business day after the bond

closing, regardless of whether the underwriter has

in fact received the official statement by such day.

7 In approving this rule, the Commission has

considered the proposed rule’s impact on

efficiency, competition, and capital formation. 15

U.S.C. 78c(f).

8 15 U.S.C. 78f(b).

9 15 U.S.C. 78o–4(b)(2)(C).

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange does not believe that

the proposed rule change will impose

any burden on competition not

necessary or appropriate in furtherance

of the purposes of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants, or Others

The Exchange neither solicited nor

received written comments with respect

to the proposed rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Within 35 days of the date of

publication of this notice in the Federal

Register or within such longer period (i)

as the Commission may adequate up to

90 days of such date if it finds such

longer period to be appropriate and

publishes its reasons for so finding, or

(ii) as to which the Amex consents, the

Commission will:

A. By order approve the proposed rule

change, or

B. Institute proceedings to determine

whether the proposed rule change

should be disapproved.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether the proposed rule

change, as amended, is consistent with

the Act. Persons making written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, NW., Washington, DC 20549–

0609. Copies of the submissions, all

subsequent amendments, all written

statements with respect to the proposed

rule change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any persons, other

than those that may be withheld from

the public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the Amex. All

submissions should refer to File No.

SR–Amex–00–03 and should be

submitted by July 18, 2000.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.10

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–16206 Filed 6–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42967; File No. SR–MSRB–

99–11]

Self-Regulatory Organizations;

Municipal Securities Rulemaking

Board; Order Approving Proposed

Rule Change To Amend Rule G–36

June 21, 2000.

I. Introduction

On December 10, 1999, the Municipal

Securities Rulemaking Board (‘‘MSRB’’

or the ‘‘Board’’) filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’), pursuant to Section

19(b)(1) of the Securities Exchange Act

of 1934 (‘‘Act’’) 1 and Rule 19b–4

thereunder,2 a proposed rule change to

amend Rule G–36, on delivery of official

statements, advance refunding

documents and Forms G–36(OS) and G–

36(ARD) to the Board or its designee.

The proposed rule change was

published for comment in the Federal

Register on February 9, 2000.3 The

Commission received no comments on

the proposal. This order approves the

proposal.

II. Description of the Proposal

The Board has filed with the

Commission a proposed rule change to

amend Rule G–36, on delivery of official

statements, advance refunding

documents and Forms G–36(OS) and G–

36(ARD) to the Board or its designee.

Rule G–36 requires, among other things,

that a broker, dealer or municipal

securities dealer (a ‘‘dealer’’) acting as

underwriter in a primary offering of

municipal securities (with certain

limited exceptions) send to the Board

copies of the official statement and

completed Form G–36(OS).

Originally, Rule G–36 applied to all

primary offerings of municipal

securities regardless of principal

amount, other than primary offerings

that qualified for exemption under

paragraph (d)(1) of Rule 15c2–12 under

the Act.4 The Board subsequently

amended Rule G–36 to include certain

categories of primary offerings that are

exempt under Rule 15c2–12(d)(1).5 For

any primary offering subject to Rule G–

36(c)(i), the underwriter currently is

required to send two copies of the

official statement, if one is prepared, in

final form with two copies of Form G–

36(OS), to the Board by the business day

after the issuer delivers the municipal

securities to the underwriter (the ‘‘bond

closing’’).

As amended, the rule would require

an underwriter in a primary offering

subject to Rule G–36(c)(i) for which an

official statement in final form is

prepared by the issuer to send two

copies of the official statement in final

form, together with two copies of Form

G–36(OS), to the Board by the later of

(i) one business day after the bond

closing or (ii) one business day after

receipt of the official statement from the

issuer.6

III. Discussion

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act 7 and the

rules and regulations thereunder

applicable to the MSRB.8 In particular,

the Commission finds the amendments

to MSRB Rule G–36 consistent with the

requirements of Section 15B(b)(2)(C) 9 of

the Act, which provides, in part, that

the Board’s rules shall:

be designed to prevent fraudulent and

manipulative acts and practices, to promote

just and equitable principles of trade, to

foster cooperation and coordination with

persons engaged in regulating, clearing,

settling, processing information with respect

39640 Federal Register / Vol. 65, No. 124 / Tuesday, June 27, 2000 / Notices

10 15 U.S.C. 78s(b)(2).

11 17 CFR 200.30–3(a)(12).

1 17 CFR 270.23c–3(b).

2 15 U.S.C. 80a–1, et seq.

3See February 28, 2000 letter and attachments

from Joan C. Conley, Secretary, NASD Regulation to

Katherine A. England, Assistant Director, Division

of Market Regulation (‘‘Division’’), SEC

(‘‘Amendment No. 1’’). In Amendment No. 1, NASD

Regulation made changes to the language of the

proposed new rule. Exhibits 2 through 4 that were

attached to the original filing are incorporated by

reference in Amendment No. 1.

4See March 17, 2000 letter from Suzanne E.

Rothwell, Chief Counsel, Corporate Financing,

NASD Regulation to Katherine A. England,

Assistant Director, Division, SEC (‘‘Amendment No.

2’’). In Amendment No. 2, NASD Regulation made

minor, technical changes to the proposed new rule.

5See Securities Exchange Act Release No. 42601

(March 30, 2000), 65 FR 18405 (SR–NASD–99–74).

6See April 27, 2000 letter from Kathy D. Ireland,

Associate Counsel, Investment Company Institute

(‘‘ICI’’), to Jonathan G. Katz, Secretary, SEC (‘‘ICI

Letter’’).

7 17 CFR 270.23c–3(b).

8 15 U.S.C. 80a–1, et seq.

9 Id.

10 15 U.S.C. 80a–5(a)(2).

11Section 5(a)(1) of the 1940 Act defines ‘‘openend company’’ as ‘‘a management company which

is offering for sale or has outstanding any

redeemable security for which it is the issuer.’’

Section 5(a)(2) of the 1940 Act defines ‘‘closed-end

company’’ as ‘‘any management company other

than an open-end company.’’15 U.S.C. 80a–5(a)(1)

and (2).

12 15 U.S.C. 80a–1, et seq.

13 Id.

to, and facilitating transactions in municipal

securities, to remove impediments to and

perfect the mechanism of a free and open

market in municipal securities, and, in

general, to protect investors and the public

interest.

The MSRB represents that the

proposed rule change is intended to

provide relief to underwriters that face

violation of Rule G–36(c)(i) caused by a

delay in delivery by issuers for whom

no concomitant obligations exists to

delivery an official statement by any

particular date. The Commission

believes that because underwriters and

other dealers are still required to adhere

to their continuing obligation under

Rule G–32 to deliver official statements

for new issue municipal securities to

customers by settlement, the MSRB

proposal will foster cooperation among

persons engaged in regulating, clearing,

settling, processing information with

respect to, and facilitating transactions

in municipal securities, without

adversely affecting the protection of

investors and the public interest.

In general, underwriters may be

exposed to a potential violation of Rule

G–36 when an issuer fails to provide the

official statement. The Commission

notes that pursuant to Rule 15c2–

12(b)(3), underwriters are required to

contract to obtain official statements

and thus have an enforceable

mechanism to obtain the official

statements. The Commission also

appreciates the situation of underwriters

who, because an issuer does not provide

a final official statement and is not

required to do so under a 15c2–12

contract, finds themselves in violation

of Rule G–36(c)(i). However, the

Commission expects that an underwriter

that receives an official statement will

provide the official statement to the

Board without delay.

IV. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,10 that the

proposed rule change (SR–MSRB–99–

11) is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00–16210 Filed 6–26–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42965; File No. SR–NASD–

99–74]

Self-Regulatory Organizations; Order

Granting Approval of Proposed Rule

Change as Amended by the National

Association of Securities Dealers, Inc.

Relating To an Exemption From NASD

Conduct Rule 2710 for Closed-End

Management Companies That Make

Periodic Repurchases of Their

Securities Under Rule 23c–3(b) of the

Investment Company Act of 1940

June 20, 2000.

I. Introduction

On December 20, 1999, the National

Association of Securities Dealers, Inc.

(‘‘NAD’’ or ‘‘Association’’), through its

wholly owned subsidiary, NASD

Regulation, Inc. (‘‘NASD Regulation’’),

filed with the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

a proposed rule change regarding an

exemption from NASD Conduct Rule

2710 (‘‘Corporate Financing Rule’’) for

closed-end management companies that

make periodic repurchases of their

securities under Rule 23c–3(b) 1 of the

Investment Company Act of 1940

(‘‘1940 Act’’) 2 NASD Regulation filed an

amendment to the proposed rule change

on February 29, 2000, which

amendment entirely replaced and

superseded the initial proposal. 3 On

March 20, 2000, NASD Regulation again

amended the proposal.4 The Proposed

rule change, as amended, was published

for comment in the Federal Register on

April 7, 2000.5 The Commission

received one comment letter on the

proposal.6 This order grants approval to

the proposed rule change, as amended.

II. Description of the Proposal

NASD Regulation proposes to amend

the Corporate Financing Rule and NASD

Conduct Rule 2830 to exempt public

offerings by closed-end investment

management companies that make

periodic tender offers for their securities

in compliance with Rule 23c–3(b) 7 of

the 1940 Act 8 from the filing

requirements and limitations on

underwriting compensation of the

Corporate Financing Rule and, instead,

subject such offerings to the sales charge

limitations of NASD Conduct Rule 2830.

The Corporate Financing Rule

regulates the underwriting terms and

other arrangements of public offerings of

securities. Subparagraph (b)(8)(C) of the

Corporate Financing Rule provides that

securities of investment companies

registered under the 1940 Act 9 are

exempt from filing and compliance with

the Corporate Financing Rule, unless

the offerings is of securities of a

management company defined as a

‘‘closed-end’’ company in Section

5(a)(2) of the 1940 Act 10 (‘‘closed-end

funds’’).11 Thus, closed-end funds are

subject to the filing requirements, filing

fees, and regulations of the Corporate

Financing Rule. Open-end investment

companies (‘‘open-end funds’’) are

exempt from filing with NASD

Regulation under the Corporate

Financing Rule. Instead, open-end

funds’ sales charges are regulated under

NASD Conduct Rule 2830.

Closed-end funds are subject to the

core provisions of the 1940 Act 12 that

also apply to open-end funds, including

prohibitions on affiliated transactions,

obligations requiring shareholder

approval of advisory contracts, antipyramiding restrictions, and board

composition requirements. However,

such funds are not subject to other 1940

Act 13 restrictions applicable to openend funds, including certain limitations

on leverage and certain obligations

pertaining to the liquidity of

investments.

The NASD has applied the Corporate

Financing Rule and its predecessor rule

to members’ sales of the securities of

closed-end funds on the basis that