[Federal Register Volume 75, Number 222 (Thursday, November 18, 2010)]
[Notices]
[Pages 70756-70757]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-29077]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-63309; File No. SR-MSRB-2010-16]
Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Amendments to Rule G-5, on Disciplinary
Actions by Appropriate Regulatory Agencies, Remedial Notices by
Registered Securities Associations; and Rule G-17, on Conduct of
Municipal Securities Activities
November 12, 2010.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``the Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 1, 2010, the Municipal Securities Rulemaking Board
(``Board'' or ``MSRB'') 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 the MSRB. 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).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The MSRB is filing a proposed rule change consisting of amendments
to Rule G-5, on disciplinary actions by appropriate regulatory
agencies, and Rule G-17, the Board's basic fair practice rule, to apply
the rules to municipal advisors. The text of the proposed rule change
is available on the MSRB's Web site at http://www.msrb.org/Rules-and-Interpretations/SEC-Filings/2010-Filings.aspx, at the MSRB's principal
office, and at the Commission's Public Reference Room.
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 MSRB 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
Item IV below. The Board has prepared summaries, set forth in Section
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
1. Purpose
Rule G-5 currently provides that brokers, dealers, and municipal
securities dealers (``dealers'') may not engage in municipal securities
activities in contravention of restrictions imposed on them by the
Commission, a registered securities association, or another appropriate
regulatory agency. The purposes of the portion of the proposed rule
change consisting of amendments to Rule G-5 are to remove a reference
to an outdated NASD rule and to provide that municipal advisors and
their associated persons may not engage in the municipal advisory
activities described in Section 15B(e)(4)(A)(i) and (ii) of the Act in
contravention of restrictions imposed upon them by the Commission.
Rule G-17 currently provides that, in the conduct of its municipal
securities activities, each dealer shall deal fairly with all persons
and shall not engage in any deceptive, dishonest, or unfair practice.
The purpose of the portion of the proposed rule change consisting of
amendments to Rule G-17 is to apply the MSRB's core fair dealing rule
to municipal advisors in the same manner that it currently applies to
dealers.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2) of the Act, which provides that:
The Board shall propose and adopt rules to effect the purposes of
this title with respect to transactions in municipal securities
effected by brokers, dealers, and municipal securities dealers and
advice provided to or on behalf of municipal entities or obligated
persons by brokers, dealers, municipal securities dealers, and
municipal advisors with respect to municipal financial products, the
issuance of municipal securities, and solicitations of municipal
entities or obligated persons undertaken by brokers, dealers,
municipal securities dealers, and municipal advisors.
Section 15B(b)(2)(C) of the Act provides that the rules of the MSRB
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 and
municipal financial products, to remove impediments to and perfect
the mechanism of a free and open market in municipal securities and
municipal financial products, and, in general, to protect investors,
municipal entities, obligated persons, and the public interest.
The proposed rule change is consistent with Section 15B(b)(2) of
the Act, because it provides that: (i) Municipal advisors shall deal
fairly with all persons and not engage in any deceptive, dishonest, or
unfair practice and (ii) municipal advisors and their associated
persons shall not conduct the activities described in Section
15B(e)(4)(A)(i) and (ii) of the Act in contravention of restrictions
imposed upon them by the Commission.
Section 15B(2)(L) of the Act requires that rules adopted by the
Board
not impose a regulatory burden on small municipal advisors that is
not necessary or appropriate in the public interest and for the
protection of investors, municipal entities, and obligated persons,
provided that there is robust protection of investors against fraud.
The proposed rule change is necessary for the robust protection of
investors against fraud. Many municipal advisors play a key role in the
structuring of offerings of municipal securities and the preparation of
offering documents used to market those securities to investors. In
some cases, they advise on the appropriateness of derivatives entered
into by municipal issuers, the effectiveness of which may have a
substantial impact on the finances of those issuers. In other cases,
they solicit public pension fund investment advisory business that, if
not conducted according to the highest standards, may have a
substantial effect on the finances of the State and local governments
that control those funds. Investors, therefore, have a substantial
interest in municipal advisors conducting their municipal advisory
activities fairly, not engaging in fraudulent conduct, and not engaging
in municipal advisory activities contrary to
[[Page 70757]]
disciplinary actions imposed by the SEC.
B. Self-Regulatory Organization's Statement on Burden on Competition
The MSRB 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
municipal advisors. In particular, the MSRB believes that the
amendments to Rule G-5 impose no regulatory burden on any municipal
advisor because Section 15B(c) of the Act already permits the SEC to
limit the activities of municipal advisors in the manner provided for
in amended Rule G-5. Further, the MSRB believes that the amendment to
Rule G-17 imposes no regulatory burden on any municipal advisor not
necessary or appropriate in furtherance of the purposes of the Act
since most municipal advisors already comport themselves in accordance
with the standards of behavior required by Rule G-17 and no municipal
advisor has a legitimate interest in engaging in behavior that is
fraudulent or otherwise unfair.
C. Self-Regulatory Organization's Statement on Comments Received on the
Proposed Rule Change by Members, Participants, or Others
Written comments were neither solicited nor received on the
proposed rule.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 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 or disapprove such 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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-MSRB-2010-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-MSRB-2010-16. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Web site (http://www.sec.gov/rules/sro.shtml). 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 Web site viewing and printing in
the Commission's Public Reference Room, 100 F Street, NE., Washington,
DC 20549, on official business days between the hours of 10 a.m. and 3
p.m. Copies of such filing also will be available for inspection and
copying at the MSRB's offices. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-MSRB-2010-16 and should be submitted on or before
December 9, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\3\
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\3\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-29077 Filed 11-17-10; 8:45 am]
BILLING CODE 8011-01-P