Self-Regulatory Organizations; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change by the Municipal Securities Rulemaking Board Relating to Procedures for Submitting Information on Political Contributions Pursuant to Rule G-37

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-34027; File No. SR-MSRB-94-4]

Self-Regulatory Organizations; Notice of Filing and Order

Granting Accelerated Approval of Proposed Rule Change by the Municipal

Securities Rulemaking Board Relating to Procedures for Submitting

Information on Political Contributions Pursuant to Rule G-37

May 9, 1994.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on April

22, 1994, the Municipal Securities Rulemaking Board (``Board'' or

``MSRB'') filed with the Securities and Exchange Commission

(``Commission'') a proposed rule change as described in Items I and II

below, which Items have been prepared by the self-regulatory

organization. The purpose of the proposed rule change is to provide

procedures for submitting information on political contributions

pursuant to rule G-37. The Board has requested accelerated approval of

the proposed rule change in order to allow for the timely submission

of, and public access to, information concerning political

contributions. The Commission is publishing this notice to solicit

comments on the proposed rule change from interested persons. The

Commission also finds good cause for granting accelerated approval of

the proposed rule change.

I. Self-Regulatory Organization's Statement of the Terms of Substance

of the Proposed Rule Change

The Board is filing a proposed rule change to establish procedures

relating to the submission of information to the Board pursuant to rule

G-37, on political contributions and prohibitions on municipal

securities business.

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

text of these statements may be examined at the places specified in

Item IV below. The self-regulatory organization 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 April 7, 1994, the Commission approved Board rule G-37 on

political contributions and prohibitions on municipal securities

business.\1\ Rule G-37(e)(ii) provides that reports on contributions

made and municipal securities business engaged in during the reporting

period must be submitted to the Board on Form G-37, in accordance with

Board rule G-37 filing procedures, quarterly, with due dates determined

by the Board. In its rule G-37 filing, the Board noted that it was

developing appropriate rule G-37 filing procedures to allow for public

access to the information to be submitted on Form G-37.\2\ The current

proposed rule change establishes procedures for brokers, dealers and

municipal securities dealers for filing with the Board information

relating to political contributions as required by rule G-37.\3\ The

proposal also establishes procedures for filing voluntary information

relating to political contributions.\4\

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\1\Securities Exchange Act Release No. 33868 (April 7, 1994), 59

FR 17621 (April 13, 1994). Rule G-37 became effective April 25,

1994.

\2\See Securities Exchange Act Release No. 33482 (January 14,

1994), 59 FR 3389.

\3\In order to assist dealers in complying with rule G-37 filing

requirements, the Board intends to develop an informal ``Procedures

Manual'' which will contain the relevant forms and procedures.

\4\Brokers, dealers, municipal securities dealers, or others may

voluntarily submit to the Board additional information relating to

political contributions provided that such information is submitted

in accordance with Board rule G-37 filing procedures.

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The proposal requires dealers to file two copies of Form G-37, and

to submit such forms 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. The Board will maintain one copy of each Form

G-37 off-site for back-up purposes, and will maintain the second copy

of each Form G-37 at its Public Access Facility (``PAF'') in Virginia,

where it will be available to the public for review and

photocopying.\5\ The Board also will maintain a database of reports

filed by each dealer (as well as any other party voluntarily submitting

information on political contributions), so that any member of the

public may telephone the Board's offices to inquire whether a

particular dealer (or other party) has submitted a report pursuant to

rule G-37.\6\ To further enhance public access to this information, the

Board will provide a list of companies that offer document retrieval

and mailing services. As the Board gains experience with rule G-37

submission procedures, and as the informational needs of the municipal

market change with regard to political contributions, the Board will

seek to expand the access and services available to the public.

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\5\The Board will charge 20 cents per page plus sales tax, if

applicable, for photocopying. This is the same pricing structure

currently used for photocopying official statements and advance

refunding documents at the PAF.

\6\In addition to the dealer's name, the information available

through the database will include, among other things, the quarterly

period covered by the report and summary information on political

contributions. Although rule G-37 requires dealers to report certain

summary information concerning contributions, it does not require

disclosure of the names of individual municipal finance

professionals or executive officer contributors.

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While the rule G-37 procedures will result in many dealers filing

forms at or about the same time, the Board believes that it can

adequately process this information in a timely manner. However, if

such processing becomes unduly burdensome for the Board, then it may

consider staggering dealer submission due dates in the future. In

addition, if the number of voluntary submissions substantially

increases the Board's costs of processing this information, then it may

consider charging a filing fee to cover some of the expenses associated

with certain of this voluntarily submitted information. Finally, the

Board, in the future, may review the necessity for, and propriety of,

charging an access fee for the forms filed, if any, pursuant to rule G-

37.

The Board believes that 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 will apply equally to

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 requested that the Commission find good cause,

pursuant to Section 19(b)(2) of the Act, for approving the proposed

rule change prior to the thirtieth day after publication of the notice

of filing in the Federal Register. The Board believes that accelerated

approval is necessary to facilitate timely submission of, and public

access to, information concerning political contributions by allowing

dealers to comply with these requirements by the first reporting

deadline of July 31, 1994.

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 Board, and, in particular, with Section

15B(b)(2)(C) and (G) of the Act.\7\ Section 15B(b)(2)(C) authorizes the

MSRB to adopt rules 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 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. Section 15B(b)(2)(G) authorizes the MSRB to adopt rules that

prescribe the records to be made and kept by municipal securities

dealers and the periods for which such records shall be preserved.

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\7\Sections 15B(b)(2)(C), (G); [15 U.S.C. Secs. 78o-4(b)(2)(C),

(G)].

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The proposal establishes appropriate due dates and procedures for

filing with the Board information concerning political contributions

required by rule G-37(e)(ii). The Commission also finds good cause for

approving the proposed rule change prior to the thirtieth day after the

date of publication of the notice of filing in the Federal Register.

Accelerated approval is appropriate to facilitate the timely submission

of, and public access to, information concerning political

contributions by allowing dealers to comply with the reporting

requirements, pursuant to rule G-37, by the first reporting deadline of

July 31, 1994.

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, 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 relations 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 principal

office of the Board. All submissions should refer to File No. SR-MSRB-

94-4 and should be submitted by June 3, 1994.

It is therefore ordered, pursuant to Section 19(b)(2) of the

Act,\8\ that the proposed rule change be, and hereby is, approved.

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\8\15 U.S.C. 78s(b)(2).

For the Commission by the Division of Market Regulation,

pursuant to delegated authority, 17 U.S.C. 200.30-3(a)(12).

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94-11699 Filed 5-12-94; 8:45 am]

BILLING CODE 8010-01-M