MSRB: Dealers Must Report Bond Ballot Campaign Contributions Under MSRB Rule G-37

09 February 2010 Publication
Authors: Phillip M. Goldberg Heidi H. Jeffery Samuel J. Winer

Legal News Alert: Finance & Financial Institutions

On January 22, 2010, the Municipal Securities Rulemaking Board (MSRB) published MSRB Notice 2010-01 (Notice), advising the public that the SEC approved amendments to Rule G-37, on political contributions to be made by brokers, dealers, and municipal securities dealers (collectively, dealers) and resulting prohibitions on municipal securities business, and Rule G-8, on books and records.

For purposes of this alert and the Notice, the term “bond ballot campaign” means any fund, organization, or committee that solicits or receives contributions to be used to support ballot initiatives seeking authorization for the issuance of municipal securities through public approval obtained by popular vote.

Effective February 1, 2010, the MSRB will require each dealer to:

  • Disclose certain contributions to bond ballot campaigns made by the dealer, its municipal finance professionals (MFPs), the related political action committees (PACs), and its non-MFP executive officers on MSRB Form G-37
  • Create and maintain records under MSRB Rule G-8 of non-de minimis contributions to bond ballot campaigns
  • Report on amended Form G-37 allnon-de minimis contributions to bond ballot campaigns made by dealers, MFPs, their PACs, and non-MFP executive officers on or after February 1, 2010, beginning with the report for the current calendar quarter (which is required to be filed with the MSRB by no later than April 30, 2010)

The amendments to the rule do not, however, provide for a ban on municipal securities business as a result of contributions to bond ballot campaigns.

The amended Form G-37 will require disclosure of the following:

  • The official name of each bond ballot campaign receiving contributions during such calendar quarter
  • The jurisdiction (including city/county/state or political subdivision) by or for which municipal securities, if approved, would be issued
  • The contribution amount made and the category of contributor (that is, dealer, dealer-controlled PAC, MFP-controlled PAC, MFP and non-MFP executive officers), all as set forth in the revised Form G-37

Rule G-37 has a de minimis exception to the reporting for contributions made by an MFP or non-MFP executive officer to a bond ballot campaign for a ballot initiative in which that officer is entitled to vote, if his/her total bond ballot campaign contributions do not exceed $250 per ballot initiative.

The Notice should prompt each dealer to re-examine its written policies and procedures to determine whether those policies and procedures are appropriate in light of the requirements of the Notice.

Legal News Alert is part of our ongoing commitment to providing up-to-the-minute information about pressing concerns or industry issues affecting our clients and colleagues.

If you have any questions about this alert or would like to discuss the topic further, please contact your Foley attorney or the following individuals:

Samuel J. (Sandy) Winer
Washington, D.C.

Phillip M. Goldberg
Chicago, Illinois

Heidi H. Jeffery
Chicago, Illinois

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