The Municipal Securities Rulemaking Board Reminds Dealers About Political Contributions...

Thu Sep 11, 2008 5:50pm EDT

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The Municipal Securities Rulemaking Board Reminds Dealers About Political
Contributions Rule

Rule G-37 Applies to Issuer Officials Running for Federal Office

ALEXANDRIA, Va., Sept. 11 /PRNewswire-USNewswire/ -- The Municipal Securities
Rulemaking Board (MSRB) reminded municipal securities dealers today about its
rule on political contributions and its application to issuer officials
running for federal office, including President and Vice President. The MSRB
rule regarding campaign contributions, Rule G-37, prohibits dealers from
engaging in municipal securities business with issuers for two years if they
make certain contributions to the political campaigns of officials of such
issuers. The MSRB created Rule G-37 in 1994 to preserve the integrity of the
municipal securities industry by seeking to end the practice of dealers being
awarded municipal securities business based on political contributions. 

"As election fundraising campaigns head into their final weeks, the MSRB
wanted to remind dealers about the application of Rule G-37 to issuer
officials running for federal office - an area of the rule which can be
overlooked," said MSRB Chair Frank Chin.  "Our notice to dealers reviews prior
guidance in this area and also cautions dealers to consider prior MSRB
guidance on indirect rule violations."  

In the years since the MSRB enacted Rule G-37, it has published several
interpretations of the rule as it applies to various situations.  Several of
those dealt with issuer officials who are running for federal office.  Today's
notice reminds dealers that, under Rule G-37, any municipal finance
professional in the country can contribute up to $250 to an issuer official's
Presidential or Vice Presidential campaign without triggering the ban on
municipal securities business with that issuer.  The rule has an exemption
from the ban on business for contributions of $250 or less per election to
candidates for whom the municipal finance professional is entitled to vote.  
Every municipal finance professional in the United States is entitled to vote
in the Presidential election.

Today's notice to dealers also cites prior interpretations of Rule G-37 that
address indirect rule violations involving contributions to non-dealer
associated political action committees and payments to political parties. 
These interpretations underscore the requirement in Rule G-37 that dealers
cannot indirectly do what they are prohibited from doing directly. 

To view MSRB's today's notice to dealers on Rule G-37, go to 
To read Rule G-37, go to 

The Municipal Securities Rulemaking Board (MSRB) was established in 1975 by
Congress to develop rules regulating securities firms and banks involved in
underwriting, trading, and selling municipal securities.  The Board also
operates information systems, including the Electronic Municipal Market Access
System (EMMA), designed to promote transparency and access to information, and
also has an extensive outreach and education effort.  The Board is composed of
members from the municipal securities dealer community and the public, and is
charged with protecting investors and promoting a fair and efficient market. 
The Board is a self-regulatory organization that is subject to oversight by
the Securities and Exchange Commission.

SOURCE  Municipal Securities Rulemaking Board (MSRB)

Jennifer A. Galloway, Chief Communications Officer, +1-703-797-6675,
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