Document ID: SEC-2005-0098-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: Municipal Securities Rulemaking Board
Posted Date: 2005-10-11T04:00Z

[Federal Register: October 11, 2005 (Volume 70, Number 195)]
[Notices]               
[Page 59106-59107]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11oc05-78]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52555, File No. SR-MSRB-2005-02]

 
Self-Regulatory Organizations; Municipal Securities Rulemaking 
Board; Order Approving Proposed Rule Change Relating to Amendments to 
MSRB Rule G-20, on Gifts and Gratuities, and MSRB Rule G-8, on 
Recordkeeping

October 3, 2005.
    On January 13, 2005, the Municipal Securities Rulemaking Board 
(``MSRB'' or ``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 consisting of amendments to Rule 
G-20, on gifts and gratuities, and the related recordkeeping 
requirements of Rule G-8. The proposed rule change was published for 
comment in the Federal Register on August 24, 2005.\3\ The Commission 
received one comment letter regarding the proposal.\4\ On September 26, 
2005, the MSRB filed a

[[Page 59107]]

response to the comment letter from Griffin, Kubik.\5\ This order 
approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 52290 (August 18, 
2005), 70 FR 49696 (August 24, 2005) (the ``Commission's Notice'').
    \4\ See letter to Jonathan G. Katz, Secretary, Commission, from 
Robert J. Stracks, Counsel to Griffin, Kubik, Stephens & Thompson, 
Inc. (``Griffin, Kubik''), dated September 13, 2005 (``Griffin, 
Kubik's Letter'').
    \5\ See letter from Jill C. Finder, Assistant General Counsel, 
MSRB, to Martha M. Haines, Chief, Office of Municipal Securities, 
Commission, dated September 22, 2005 (``MSRB's Response Letter'').
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    The proposed rule change would more fully conform Rule G-20 to NASD 
requirements relating to gifts and gratuities, and add new provisions 
governing non-cash compensation and sales incentives in connection with 
municipal fund securities and other primary offerings of municipal 
securities, based on NASD requirements for non-cash compensation and 
sales incentives. A full description of the proposal is contained in 
the Commission's Notice.
    Griffin, Kubik stated in its comment letter that they agree with 
the MSRB that the regulation of gifts and gratuities ought to be 
consistent across those regulators governing the conduct of broker-
dealers. Nonetheless, Griffin, Kubik's Letter states that they believe 
that adoption of any changes to Rule G-20 is premature because they 
understand that the NASD, the New York Stock Exchange, Inc. (``NYSE'') 
and other regulators are currently considering the question of 
appropriate rules and standards for gifts and because the status of the 
NASD's current rule and interpretation is less than clear. The 
Commission's Notice noted that the NYSE has a pending rule filing with 
the Commission on gifts and gratuities that is currently being 
reviewed, and that the MSRB has agreed to consider filing further 
amendments to Rule G-20 or other rules, as necessary, to make its rules 
on gifts and gratuities consistent with future rule changes made by 
other self-regulatory organizations (SROs) overseen by the Commission.
    The MSRB's Response Letter stated that the MSRB determined that 
provisions comparable to current NASD requirements governing gifts and 
gratuities and the payment of non-cash compensation are appropriate for 
dealers effecting transactions in municipal securities. The MSRB's 
Response Letter also stated that, as the commentator noted, the MSRB 
has undertaken to make its rules on gifts and gratuities consistent 
with other self-regulatory organizations where appropriate for the 
municipal securities market.
    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to the MSRB \6\ and, in particular, the 
requirements of Section 15B(b)(2)(C) of the Act and the rules and 
regulations thereunder.\7\ Section 15B(b)(2)(C) of the Act requires, 
among other things, that the MSRB's rules 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.\8\ In particular, the 
Commission finds that the proposed rule change is consistent with the 
Act because it will provide for more consistent treatment across the 
securities markets regarding gifts, gratuities, non-cash compensation 
and sales incentives, thereby facilitating dealer understanding of, and 
compliance with, these requirements.
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    \6\ In approving this rule the Commission notes that it has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. 15 U.S.C. 78c(f).
    \7\ 15 U.S.C. 78o-4(b)(2)(C).
    \8\ Id.
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    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\9\ that the proposed rule change (SR-MSRB-2005-02) be, and hereby is, 
approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-5545 Filed 10-7-05; 8:45 am]

BILLING CODE 8010-01-P