55294 Federal Register / Vol. 62, No. 205 / Thursday, October 23, 1997 / Notices

1 15 U.S.C. § 78s(b)(1). 2 15 U.S.C. § 78o–4(b)(2)(C).

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39251; File No. SR–MSRB–

97–06]

October 16, 1997.

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Municipal Securities Rulemaking

Board Relating to Political

Contributions and Prohibitions on

Municipal Securities Business,

Consultants, and Recordkeeping

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

September 30, 1997, the Municipal

Securities Rulemaking Board (‘‘Board’’

or ‘‘MSRB’’) filed with the Securities

and Exchange Commission

(‘‘Commission’’ or ‘‘SEC’’) a proposed

rule change (File No. SR–MSRB–97–6).

The proposed rule change is described

in Items I, II, and III below, which Items

have been prepared by the Board. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The MSRB is filing herewith a

proposed rule change to rule G–37, on

political contributions and prohibitions

on municipal securities business, rule

G–38, on consultants, and rule G–8, on

recordkeeping (hereafter referred to as

the ‘‘proposed rule change’’). The

proposed rule change addresses the

definitions of municipal finance

professional and executive officer, and

when Form G–37/G–38 is due to be filed

with the Board.

II. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

In its filing with the Commission, the

Board included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The texts of these

statements may be examined at the

places specified in Item IV below. The

Board has prepared summaries, set forth

in Sections A, B, and C below, of the

most significant aspects of such

statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

During the past year, the Board has

received questions regarding certain

technical aspects of rules G–37, G–38

and G–8. Specifically, these questions

have been concerned with the

definitions of municipal finance

professional and executive officer, and

when Form G–37/G–38 is due to be filed

with the Board. The proposed rule

change addresses these areas within the

rules.

Definitions of Municipal Finance

Professional and Executive Officer

The Board believes that some dealers

are improperly classifying, for rule G–37

purposes, certain individuals within

their firms as executive officers when

these individuals actually meet the

definition of municipal finance

professionals and should be classified as

such. Contributions by executive

officers must be recorded and reported

but, unlike certain contributions by

municipal finance professionals, would

not cause a prohibition on municipal

securities business. The definition of

executive officer makes clear that

municipal finance professionals cannot

also be executive officers. To further

underscore this point, the proposed rule

change revises the name of the category

of individuals currently referred to as

‘‘executive officers’’ to ‘‘non-MFP

executive officers.’’ This change in

name should help dealers avoid any

misunderstandings that a person who

functions as a municipal finance

professional cannot be classified, for

purposes of rule G–37, as an executive

officer.

Due Date for Form G–37/G–38 to be Filed

With the Board

Rules G–37 and G–38 state that Form

G–37/G–38 must be submitted to the

Board ‘‘within thirty (30) calendar days

after the end of each calendar quarter

(these dates correspond to January 31,

April 30, July 31 and October 31).’’

Because of the inconsistency in the

language for those months with 31 days,

the proposed rule change revises the

rule language to require that the forms

be sent ‘‘by the last day of the month

following the end of each calendar

quarter.’’ The forms do not have to be

received by the Board by the last day of

the month following the end of each

calendar quarter, but the proposed rule

change requires that dealers must have

the forms on their way to the Board by

the last day of the month following the

end of each calendar quarter in order to

be in compliance with the delivery

requirements of the rules.

The proposed rule change also

contains non-substantive, technical rule

language changes to make similar

requirements consistent throughout the

rules.

The Board believes the proposed rule

change is consistent with Section

15B(b)(2)(C) 2 of the Act, which provides

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

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.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Board 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

Written comments were neither

solicited nor received.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

Because the foregoing proposed rule

change: (i) does not significantly affect

the protection of investors or the public

interest; (ii) does not impose any

significant burden on competition; (iii)

was provided to the Commission for its

review at least five days prior to the

filing date; and (iv) does not become

operative for thirty (30) days from the

date of its filing on September 30, 1997,

the proposed rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act and Rule 19b–4(e)(6)

thereunder. In particular, the

Commission believes the proposed rule

change qualifies as a ‘‘non-controversial

filing’’ in that the proposed standards

do not significantly affect the protection

of investors or the public interest and do

not impose any significant burden on

competition, and because it makes

technical clarifying changes to existing

Board rule. At any time within sixty

days of the filing of the proposed rule

change, the Commission may summarily

abrogate such rule change if it appears
Federal Register / Vol. 62, No. 205 / Thursday, October 23, 1997 / Notices 55295

3 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1). 2 15 U.S.C. 78s(b)(3)(A)(i). 3 15 U.S.C. 78o–3.

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

Persons making written submissions

should file six copies thereof with the

Secretary, Securities and Exchange

Commission, 450 Fifth Street, N.W.,

Washington, D.C. 20549. 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 in

the Commission’s Public Reference

Room. Copies of the filing will also be

available for inspection and copying at

the Board’s principal offices. All

submissions should refer to File No.

SR–MSRB–97–6 and should be

submitted by November 13, 1997.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.3

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 97–28123 Filed 10–22–97; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–39250; File No. SR–NASD–

97–75]

October 16, 1997.

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to the Distribution of

Information Concerning the Availability

of the NASD Regulation, Inc. Public

Disclosure Program

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 notice is hereby given that on

October 14, 1997, NASD Regulation,

Inc. (‘‘NASD Regulation’’) filed with the

Securities and Exchange Commission

(‘‘SEC’’ or ‘‘Commission’’) the proposed

rule change as described in Items I, II,

and III below, which Items have been

prepared by NASD Regulation. NASD

Regulation has designated this proposal

as one constituting a stated policy,

practice, or interpretation with respect

to the meaning of an existing rule under

Section 19(b)(3)(A)(i) of the Act,2 which

renders the rule effective upon the

Commission’s receipt of this filing. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

NASD Regulation is proposing a rule

change to amend Conduct Rule 2280 of

the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), to postpone the effective

date from September 10, 1997, to

January 1, 1998. The text of Rule 2280

is not changed.

II. Self-Regulatory Organization’s

Statement of the Purpose of and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NASD Regulation included statements

concerning the purpose of and basis for

the proposed rule change and discussed

any comments it received on the

proposed rule change. The text of these

statements may be examined at the

places specified in the Item IV below.

NASD Regulation has prepared

summaries, set forth in Sections A, B,

and C below, of the most significant

aspects of such statements.

A. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

On February 11, 1997, NASD

Regulation proposed Rule 2280,

‘‘Investor Education and Protection,’’

which requires certain NASD members

to provide customers with specified

disclosures regarding NASD

Regulation’s Public Disclosure Program

in writing not less than once every

calendar year. NASD Regulation filed

Amendment No. 1 on July 31, 1997. The

SEC approved Rule 2280 on September

10, 1997, therefore, the rule was

effective on that date. Rule 2280

contemplates that the specified

disclosures concerning the Public

Disclosure Program will be made

through customer account statements or

in another type of publication at least

once each calendar year. The proposed

rule change is necessary to provide

members with sufficient time to comply

with the Rule.

Members generally send account

statements to customers on a monthly

basis if there is account activity, or on

a quarterly basis if there is none. Rule

2280, with its current effective date of

September 10, 1997, is draconian in that

it would leave members with very little

time in which to modify their account

statement production processes to

include the disclosures required under

Rule 2280. Members would have only a

few weeks to comply with a Rule that

envisioned a compliance period of up to

one year. Many members have already

earmarked their account statements for

the remainder of the calendar year with

pertinent year-end information, such as

tax-related notices, and in many cases

there may not be sufficient space to

include these additional disclosures

without incurring substantial costs.

Additionally, for members with

customers with inactive accounts, a

separate mailing would be required

because year-end or fourth-quarter

account statements would not comply

with Rule 2280 since such notices

would not be sent until early 1998.

The Commission’s Order approving

Rule 2280 noted that the Rule was

amended to address concerns that

compliance with Rule 2280 would

impose ‘‘significant costs’’ on firms that

normally do not carry customer

accounts and hold customer funds or

securities. The case for postponing the

effective date of Rule 2280 is even more

compelling. In the absence of a

postponement of the effective date,

many members would be required to

create an entirely separate mailing to

customers to provide the disclosures

required under Rule 2280. The cost of

such a mailing would be very significant

and would be inconsistent with the

objective of Rule 2280, which is to allow

members to provide the specified

disclosures in a cost-effective manner.

NASD Regulation believes that the

proposed rule change is consistent with

the provisions of Section 15A(b) of the

Act 3 in that postponing the effective

date of Rule 2280 does not diminish the

rule’s effectiveness in protecting

investors and the public interest.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

NASD Regulation does not believe

that the proposed rule change will result

in any burden on competition that is not

necessary or appropriate in furtherance

of the purposes of the Act, as amended.