Federal Register / Vol. 66, No. 125 / Thursday, June 28, 2001 / Notices 34499

21See ICI Letter.

22See Anonymous E-mail. 23 17 CFR 200.30–3(a)(12).

1Proposed new language is in italicized and

underlined; [ ] means deletions.

the system would permit electronic

submission of amendments only if the

original official statement or advance

refunding document had been

submitted electronically. The MSRB

agrees that this would be an appropriate

change, allowing for more expedited

dissemination of amendmenets to

official statements and advance

refunding documents to the

marketplace. This should help to

minimize erroneous reliance on

outdated documents.

Miscellaneous. One commenter

suggests that the MSRB expand the

definition of advance refunding

document to include verification reports

and defeasance opinions.21 Although

the MSRB agrees that such documents

may be important in the valuation of

advance refunded securities, it does not

believe that underwriters are well

positioned to provide such information

in many circumstances, particularly

since such documents often are not

delivered until well after the

underwriting period has lapsed.

Another commentator states that the

proposed electronic system was a ‘‘great

idea’’ but that ‘‘those individual

investors who do not have access to a

PC will have problems.’’22 This

commentator apparently has confused

the obligation of underwriters to submit

official statements to the MSRB under

rule G–36 with the obligation of dealers

selling new issue municipal securities

to customers to deliver official

statements to such customers under rule

G–32. The MSRB understands the

concern expressed by this commentator

and notes that paper versions of official

statements are required to be delivered

to customers unless the dealer meets the

requirements for electronic delivery set

forth in the 1998 MSRB Notice.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

SEC Action

Within 35 days of the publication of

this notice in the Federal Register or

within such longer period (i) as the

Commission may designate 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 self-regulatory organization

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 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 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 MSRB’s principal offices. All

submissions should refer to File No.

SR–MSRB–2001–03 and should be

submitted by July 19, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.23

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–16255 Filed 6–27–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44464; File No. SR–MSRB–

2001–04]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the Municipal Securities Rulemaking

Board Relating to In-Firm Delivery of

the Regulatory Element of the

Continuing Education Requirement

June 22, 2001.

On June 14, 2001, 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–2001–

04), pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), and Rule

19b–4 thereunder. 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 Board is filing herewith

amendments to rules G–3, on

professional qualifications, rule G–8, on

books and records, G–9, on record

retention, and G–27, on supervision.

The proposed rule change will allow

dealers to provide in-firm delivery of

Regulatory Element of the continuing

education requirement. The text of the

proposed rule change is below.1

Rule G–3. Classification of Principals and

Representatives; Numerical Requirements;

Testing; Continuing Education Requirements

No broker, dealer or municipal securities

dealer or person who is a municipal

securities representative, municipal

securities principal of financial and

operations principal (as hereafter defined)

shall be qualified for purposes of rule G–2

unless such broker, dealer or municipal

securities dealer or person meets the

requirements of this rule.

(a) through (g) No change.

(h) Continuing Education Requirements

This section (h) prescribes requirements

regarding the continuing education of certain

registered persons subsequent to their

registration with a securities association with

respect to a person associated with a member

of such association, or the appropriation

regulatory agency as defined in section

3(a)(34) of the Act with respect to a person

associated with any other broker, dealer or

municipal securities dealer (‘‘the appropriate

enforcement authority’’). The requirements

shall consists of a Regulatory Element and a

Firm Element as set forth below.

(i) Regulatory Element

(A) through (F) No change.

(G) In-Firm Delivery of the Regulatory

Element

Brokers, dealers and municipal securities

dealers will be permitted to administer the

continuing education Regulatory Element

program to their registered persons by

instituting an in-firm program acceptable to

the Board.

The following procedures are required:

(1) Principal In-Charge. The broker, dealer

or municipal securities dealer has designated

a municipal securities principal or a general

securities principal to be responsible for the

in-firm delivery of the Regulatory Element.

(2) Site Requirements.

(a) The location of all delivery sites will be

under the control of the broker, dealer or

municipal securities dealer.

(b) Delivery of Regulatory Element

continuing education will take place in an

environment conducive to training.

(Examples: A training facility, conference

room or other area dedicated to this purpose

34500 Federal Register / Vol. 66, No. 125 / Thursday, June 28, 2001 / Notices

would be appropriate. Inappropriate

locations would include a personal office or

any location that is not or cannot be secured

from traffic and interruptions).

(c) Where multiple delivery terminals are

placed in a room, adequate separation

between terminals will be maintained.

(3) Technology Requirements. The

communication links and firm delivery

computer hardware must comply with

standards defined by the Board or its

designated vendor.

(4) Supervision.

(a) The broker, dealer or municipal

securities dealer’s written supervisory

procedures must contain the procedures

implemented to comply with the

requirements of in-firm delivery of the

Regulatory Element continuing education.

(b) The broker, dealer or municipal

securities dealer’s written supervisory

procedures must identify the municipal

securities principal or general securities

principal designated pursuant to section

(h)(i)(G)(1) of this rule and contain a list of

individuals authorized by the broker, dealer

or municipal securities dealer to serve as

proctors.

(c) Firm locations for delivery of the

Regulatory Element continuing education

will be specifically listed in the broker, dealer

or municipal securities dealer’s written

supervisory procedures.

(5) Proctors.

(a) All sessions will be proctored by an

authorized person during the entire

Regulatory Element session. Proctors must be

present in the session room or must be able

to view the person(s) sitting for Regulatory

Element continuing education through a

window or by video monitor.

(b) The individual responsible for

proctoring at each administration will sign a

certification that required procedures have

been followed, that no material from

Regulatory Element continuing education has

been reproduced, and that no candidate

received any assistance to complete the

session. Such certification may be part of the

sign-in log required under section

(h)(i)(G)(6)(c) of this rule.

(c) Individuals serving as proctors must be

persons registered with a self-regulatory

organization and supervised by the

designated principal for purposes of in-firm

delivery of the Regulatory Element

continuing education.

(d) Proctors will check and verify the

identification of all individuals taking

Regulatory Element continuing education.

(6) Administration.

(a) All appointments will be scheduled in

advance using the procedures and software

specified by the Board to communicate with

the Board’s system and designated vendor.

(b) The broker, dealer or municipal

securities dealer and its proctor will conduct

each session in accordance with the

administrative appointment scheduling

procedures established by the Board or its

designated vendor.

(c) A sign-in log will be maintained at the

delivery facility. Logs will contain the date of

each session, the name and social security

number of the individual taking the session,

the fact that required identification was

checked, the sign-in time, the sign-out time,

and the name of the individual proctoring

the session. Such logs are required to be

retained pursuant to rules G–8 and G–9.

(d) No material will be permitted to be

utilized for the session nor may any sessionrelated material be removed.

(e) Delivery sites will be made available for

inspection by the appropriate enforcement

authority.

(f) Before commencing the in-firm delivery

of the Regulatory Element continuing

education, brokers, dealers and municipal

securities dealers are required to file with the

Board a letter of attestation (as specified

below) signed by a municipal securities

principal or general securities principal

attesting to the establishment of required

procedures addressing principal in-charge,

supervision, site, technology, proctors, and

administrative requirements. Letters filed

with the Board should be sent to the

Municipal Securities Rulemaking Board,

Professional Qualifications Department, 1900

Duke Street, Suite 600, Alexandria, Virginia,

22314.

Letter of Attestation for In-Firm Delivery

of Regulatory Element Continuing

Education

{Name of broker, dealer or municipal

securities dealer} has established procedures

for delivering Regulatory Element continuing

education on its premises. I have determined

that these procedures are reasonably

designed to comply with SRO requirements

pertaining to in-firm delivery of Regulatory

Element continuing education, including that

such procedures have been implemented to

comply with principal in-charge, supervision,

site, technology, proctors, and administrative

requirements.

lllllllllllllllllllll

Signature

lllllllllllllllllllll

Printed name

lllllllllllllllllllll

Title (Must be signed by a municipal

securities principal or general securities

principal of the broker, dealer or municipal

securities dealer)

lllllllllllllllllllll

Date

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)–(xx) No change.

(xxi) Records Concerning Sign-In Logs for

In-Firm Delivery of the Regulatory Element

Continuing Education. If applicable, each

broker, dealer and municipal securities

dealer shall maintain the records required by

rule G–3(h)(i)(G)(6)(c).

(b)–(e) No change.

(f) Compliance with Rule 17a–3. Brokers,

dealers and municipal securities dealers

other than bank dealers which are in

compliance with rule 17a–3 of the

Commission will be deemed to be in

compliance with the requirements of this

rule, provided that the information required

by subparagraph (a)(iv)(D) of this rule as it

relates to uncompleted transactions involving

customers; paragraph (a)(viii); and

paragraphs (a)(xi) through [(a)(xx)] (a)(xxi)

shall in any event be maintained.

Rule G–9. Preservation of Records

(a) No change.

(b) Records to be Preserved for Three

Years. Every broker, dealer and municipal

securities dealer shall preserve the following

records for a period of not less than three

years:

(i) through (xi) No change.

(xii) the authorization required by rule G–

8(a)(xix)(B); however, this provision shall not

require maintenance of copies of negotiable

instruments signed by customers [and]

(xiii) each advertisement from the date of

each use [.];

(xiv) the records to be maintained pursuant

to rule G–8(a)(xx); and (x)(v) the records to

be maintained pursuant to rule G–8(a)(xxi).

G–27. Supervision

(a) No change.

(b) Designation of principals.

(i) through (ii) No change.

(iii) Appropriate principal. Each dealer

shall designate a municipal securities

principal as responsible for its supervision

under sections (a) and (c) of this rule, except

as provided in this section. A non-bank

dealer shall designate a financial and

operations principal as responsible for the

financial reporting duties specified in rule G–

3(d)(i)(A–E) and with primary responsibility

for books and records under section (c)(v)

below; provided however, that a non-bank

dealer meeting the requirements of Securities

Exchange Act rule 15c3–1(a)(2)(iv), (v) or (vi)

or the exemption under rule 15c3–1(b)(3)

may, but is not required to, designate a

financial and operations principal as

responsible for such financial reporting

duties and with primary responsibility for

such books and records. In addition, a

municipal securities sales principal may be

designated as responsible for supervision

under section (c)(ii),(iii) and (vii) of this rule,

to the extent the activities pertain to sales to

or purchases from a customer; a general

securities principal may be designated as

responsible for supervision under sections

(c)(v) and (vii)(A) of this rule and under rules

G–3(h)(i)(G)(1), G–7(b) and G–21(e); and a

financial and operations principal may be

designated as responsible for supervision

under section (c)(vi) of this rule.

(c) through (e) No 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

Federal Register / Vol. 66, No. 125 / Thursday, June 28, 2001 / Notices 34501

2 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1) and 17 CFR 240.19b–4.

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, for

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

1. Purpose

The Regulatory Element is a three and

one-half hour computer-based training

program that previously had only been

administered to registered persons at the

location of an outside vendor. Rule G–

3(h)(i)(A)(1) requires that each

registered person, who is not exempt

from the rule, complete the Regulatory

Element on the occurrence of his or her

second registration anniversary and

every three years thereafter. On each

occasion, the training must be

completed within 120 days after the

registered person’s anniversary date. A

registered person who has not

completed the Regulatory Element

within the prescribed time periods is

deemed to be inactive until the

Regulatory Element has been fulfilled,

and may not conduct, or be

compensated for, activities requiring a

securities registration.

The Securities Industry/Regulatory

Council on Continuing Education

(‘‘Council’’) is responsible for the

oversight of the continuing education

program for the securities industry. The

Council’s duties include recommending

and helping to develop specific content

and questions for the Regulatory

Element, and minimum core curricula

for the Firm Element. The Council is

comprised of 14 representatives from a

broad cross section of broker/dealers

and six self-regulatory organizations,

including the MSRB. The Council,

working with representatives from the

North American Securities

Administrators Association, and with

the knowledge of the Council’s

Securities and Exchange Commission

liaisons, has developed a model under

which brokers, dealers and municipal

securities dealers may deliver the

Regulatory Element computer-based

training on firm premises. The model

requires that the broker, dealer or

municipal securities dealer meet certain

conditions for in-firm delivery relating

to computer hardware and to the

security of the training delivery

environment. The proposed rule change

encapsulates the delivery requirements

as specified by the Council. Brokers,

dealers and municipal securities dealers

of any size may take advantage of the infirm delivery procedures.

2. Statutory Basis

The Board believes the proposed rule

change is consistent with section

15B(b)(2)(C) of the Securities Exchange

Act of 1934 (‘‘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 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 Board believes that the proposed

rule change is consistent with the Act in

that it will facilitate registered persons

satisfying their obligations to meet the

Regulatory Element of the continuing

education requirement.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Board does not believe that the

proposed rule change would 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 dealer.

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

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 designate 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 self-regulatory

organization consents, the Commission

will:

(A) By order approve such proposed

rule change, or

(B) Institute proceedings to determine

whether the proposed rule change

should be disapproved.

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.

SR–MSRB–2001–04 and should be

submitted by July 19, 2001.

For the Commission by the Division of

Market Regulation, pursuant to delegated

authority.2

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–16256 Filed 6–27–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44459; File No. SR–MSRB–

2001–02]

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, and Rule G–38,

on Consultants

June 20, 2001.

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

Securities Exchange Act of 1934 (‘‘Act’’)

and Rule 19b–4 thereunder,1 notice is

hereby given that on June 7, 2001, the

Municipal Securities Rulemaking Board

(‘‘MSRB’’) filed with the Securities and

Exchange Commission (‘‘Commission’’)

the proposed rule change (File No. SR–

MSRB–2001–02) as described in Items,

I, II, and III below, which Items have

been prepared by the MSRB. 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 has filed with the

Commission a proposed rule change

consisting of a notice of interpretation

concerning rules G–37, on political

contributions and prohibitions on