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MSRB Proposes Revisions to “Pay-to-Play” Qualification Rule
Washington, DC, December 21, 2001 - The Municipal Securities Rulemaking Board (MSRB) has issued a notice proposing revisions to the “pay-to-play” qualification rule, to address principals supervising municipal fund activities and interpretive guidance relating to the application of various MSRB rules to the offer and sale of municipal fund securities.
The Institute filed a comment letter with the MSRB earlier this year in response to two previous notices seeking comment on "pay-to-play" practices.
The MSRB’s notice discusses the proposed revisions to rule G-3 regarding the qualification of MSPs and the interpretive guidance released by the MSRB relates to:
- the amount of dealer’s commission or service charges,
- the disclosure of program fees and charges of other parties,
- advertisements, and
- the submission of official statements to MSRB.
In addition, the MSRB’s current notice indicates that two additional issues on which it previously sought comment—confirmation disclosure of commissions and pay-to-play practices—remain under consideration by the MSRB. Also, as regards those issues relating to the capacity of the dealer, which were raised in the MSRB’s July notice, the Institute’s comment letter had recommended that the selling dealer who interacts directly with the customer be the only dealer subject to the customer protection requirements under the MSRB’s rules. The MSRB’s current notice urges dealers serving as a primary distributor in a multi-tiered distribution system to help educate selling dealers as to their frontline responsibilities under the MSRB’s customer protection rules.