[Federal Register Volume 62, Number 47 (Tuesday, March 11, 1997)]
[Notices]
[Pages 11235-11236]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-5981]



[[Page 11235]]

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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38365; File No. SR-MSRB-97-2]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the Municipal Securities 
Rulemaking Board Relating to Interpretation of Rule G-37 on Political 
Contributions and Prohibitions on Municipal Securities Business

March 5, 1997.
    On February 21, 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-97-2), pursuant to Section 19(b)(1) of the Securities Exchange 
Act of 1934 (``Act'') \1\ and Rule 19b-4 \2\ thereunder. The proposed 
rule change is described in Items I, II, and III below, which Items 
have been prepared by the Board. The Board has designated this proposal 
as constituting a stated policy, practice, or interpretation with 
respect to the meaning, administration, or enforcement of an existing 
rule of the Board under Section 19(b)(3)(A) of the Act, which renders 
the proposed rule change effective upon receipt of this filing by the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1) (1988).
    \2\ 17 CFR 240.19b-4 (1991).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Board is filing herewith a notice of interpretation concerning 
rule G-37 on political contributions and prohibitions on municipal 
securities business (hereafter referred to as ``the proposed rule 
change'').

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, 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

    (a) On April 7, 1994, the Commission approved rule G-37, concerning 
political contributions and prohibitions on municipal securities 
business.\3\ Since that time, the Board has received numerous inquiries 
concerning the application of the rule. In order to assist the 
municipal securities industry and, in particular, brokers, dealers and 
municipal securities dealers in understanding and complying with the 
provisions of the rule, the Board has published prior notices of 
interpretation which set forth general guidance on rule G-37.\4\ In 
prior filings with the Commission, the Board stated that it will 
continue to monitor the application of rule G-37 and, from time to 
time, will publish additional notices of interpretations, as 
necessary.\5\ In light of questions recently received from market 
participants concerning the activities a dealer may engage in with an 
issuer while subject to a prohibition on municipal securities business 
with that issuer, the Board has determined that it is necessary to 
provide further guidance to the municipal securities industry. 
Accordingly, the Board is publishing this notice of interpretation.
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    \3\ Securities Exchange Act Release No. 33868 (April 7, 1994), 
59 FR 17621 (April 13, 1994). The rule applies to contributions made 
on and after April 25, 1994.
    \4\ See MSRB Reports, Vol. 14, No. 3 (June 1994) at 11-16; Vol. 
14; No. 4 (August 1994) at 27-31; Vol. 14, No. 5 (December 1994) at 
8; Vol. 15, No. 1 (April 1995) at 21; Vol. 15, No. 2 (July 1995) at 
3-4; Vol. 16, No. 1 (January 1996) at 31; and Vol. 16, No. 3 
(September 1996) at 35-36. See also CCH Manual paragraph 3681.
    \5\ Securities Exchange Act Release No. 34161 (June 6, 1994), 59 
FR 30379 (June 13, 1994) [File No. SR-MSRB-94-6]; Securities 
Exchange Act Release No. 34603 (August 25, 1994), 59 FR 45049 (Aug. 
31, 1994) corrected Securities Exchange Act Release No. 34603 (Aug. 
25, 1994), 59 FR 46479 (Sept. 8,. 1994) [File No. SR-MSRB-94-15].
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    (b) The Board believes the proposed rule change is consistent with 
Section 15B(b)(2)(C) 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, since it would apply equally to 
all brokers, dealers and municipal securities dealers.

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

    The Board has designated this proposal as constituting a stated 
policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule of the Board under 
Section 19(b)(3)(A) of the Act,\6\ which renders the proposed rule 
change effective on February 21, 1997, the date of receipt of this 
filing by the Commission.
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    \6\ 15 U.S.C. 78s(b)(3)(A).
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    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 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 people are invited to submit written data, views, and 
arguments concerning the foregoing. People making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549. 
Copies of the submission, 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 person, 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.

[[Page 11236]]

SR-MSRB-97-2 and should be submitted by April 1, 1997.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-5981 Filed 3-10-97; 8:45 am]
BILLING CODE 8010-01-M