Federal Register, Volume 76 Issue 176 (Monday, September 12, 2011)

[Federal Register Volume 76, Number 176 (Monday, September 12, 2011)]
[Notices]
[Pages 56254-56262]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-23259]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65282; File No. SR-MSRB-2011-14]

Self-Regulatory Organizations; Municipal Securities Rulemaking
Board; Notice of Filing of Proposed Rule G-36, on Fiduciary Duty of
Municipal Advisors, and a Proposed Interpretive Notice Concerning the
Application of Proposed Rule G-36 to Municipal Advisors

September 7, 2011.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is
hereby given that on August 23, 2011, 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.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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

The MSRB is filing with the SEC a proposed rule change consisting
of proposed Rule G-36 (on fiduciary duty of municipal advisors) and a
proposed interpretive notice (the ``Notice'') concerning the
application of proposed Rule G-36 to municipal advisors. The MSRB
requests that the proposed rule change be made effective on the date
that rules defining the term ``municipal advisor'' under the Exchange
Act are first made effective by the Commission or such later date as
the proposed rule change is approved by the Commission.
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/2011-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 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

1. Purpose
With the passage of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (``Dodd-Frank Act''),\3\ the MSRB was expressly directed
by Congress to protect municipal entities. Accordingly, the MSRB is
proposing Rule G-36 and an interpretive notice thereunder to address
the fiduciary duty of municipal advisors to their municipal entity
clients.
---------------------------------------------------------------------------

\3\ Public Law 111-203, 124 Stat. 1376 (2010).
---------------------------------------------------------------------------

A more-detailed description of the provisions of the Notice
follows:
Duty of Loyalty. The Notice would provide that the Rule G-36 duty
of loyalty would require the municipal advisor to deal honestly and in
good faith with the municipal entity and to act in the municipal
entity's best interests without regard to financial or other interests
of the municipal advisor. It would require a municipal advisor to make
clear, written disclosure of all material conflicts of interest, such
as those that might impair its ability to satisfy the duty of loyalty,
and to receive the written, informed consent of officials of the
municipal entity the municipal advisor reasonably believes have the
authority to bind the municipal entity by contract with the municipal
advisor. Such disclosure would be required to be made before the
municipal advisor could provide municipal advisory services to the
municipal entity or, in the case of conflicts discovered or arising
after the municipal advisory relationship has commenced, before the
municipal advisor could continue to provide such services.
The Notice would provide that a municipal advisor may not undertake
an engagement if certain unmanageable conflicts exist, including (i)
kickbacks and certain fee-splitting arrangements with the providers of
investments or services to municipal entities, (ii) payments by
municipal advisors made for the purpose of obtaining or retaining
municipal advisory business other than reasonable fees paid to a
municipal advisor for solicitation activities regulated by the MSRB,
and (iii) acting as a principal in matters concerning the municipal
advisory engagement (except when providing investments to the municipal
entity on a temporary basis to ensure timely delivery for closing; when
engaging in activities permitted under Rule G-23; when it is a
municipal advisor solely because it recommends investments or municipal
financial products provided or offered by it to a municipal entity as a
counterparty (other than a swap or security-based swap counterparty);
or when acting as a swap or security-based counterparty to a municipal
entity represented by an ``independent representative,'' as defined in
the Commodity Exchange Act or the Exchange Act, respectively.
The Notice would provide that, in certain cases, the compensation
received by a municipal advisor could be so disproportionate to the
nature of the municipal advisory services performed that it would be
inconsistent with the proposed Rule G-36 duty of loyalty and would
represent an unmanageable conflict. The Notice would also provide that
a municipal advisor would be required to disclose conflicts associated
with various forms of compensation (except where the form of
compensation has been required by the municipal entity client), in
which case the disclosure need only address that form of compensation.
The Notice would also include a form of disclosure of conflicts
relating to the forms of compensation to aid advisors in preparing
their disclosure. Use of the form would not be required.
Duty of Care. The Notice would provide that the proposed Rule G-36
duty of care would require that a municipal advisor act competently and
provide advice to the municipal entity after inquiry into reasonably
feasible alternatives to the financings or products proposed (unless
the engagement is of a limited nature). The

[[Page 56255]]

Notice would also require the advisor to make reasonable inquiries into
facts necessary to determine the basis for the municipal entity's
chosen course of action, as well facts necessary to prepare
certificates and to help ensure appropriate disclosures for official
statements. The Notice would also permit the municipal advisor to limit
the scope of its engagement.
2. Statutory Basis
The MSRB believes that the proposed rule change is consistent with
Section 15B(b)(2) of the Exchange Act, which provides, in pertinent
part, 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(c)(1) of the Exchange Act also provides, in
pertinent part, that:
A municipal advisor and any person associated with such
municipal advisor shall be deemed to have a fiduciary duty to any
municipal entity for whom such municipal advisor acts as a municipal
advisor, and no municipal advisor may engage in any act, practice,
or course of business which is not consistent with a municipal
advisor's fiduciary duty or that is in contravention of any rule of
the Board.
Section 15B(b)(2)(L) of the Exchange Act provides, in pertinent
part, that:
[The rules of the Board, at a minimum, shall,] with respect to
municipal advisors--(i) prescribe means reasonably designed to
prevent acts, practices, and courses of business as are not
consistent with a municipal advisor's fiduciary duty to its clients.

The proposed rule change is consistent with Section 15B(c)(1) of
the Exchange Act and Section 15B(b)(2)(L) of the Exchange Act because
it incorporates the fiduciary duty, imposed by the Exchange Act, into a
proposed rule that would articulate the principal duties that comprise
a municipal advisor's fiduciary duty to a municipal entity client (a
duty of loyalty and a duty of care), although such duties would not be
exclusive. The proposed rule change also would provide guidance on what
conduct would be inconsistent with a duty of loyalty (principally
failing to deal honestly and in good faith with the municipal entity
and failing to act in the municipal entity's best interests without
regard to financial or other interests of the municipal advisor) and
the conflicts of interest that would be inconsistent with a duty of
loyalty (including certain third-party payments and receipts and, in
general, acting as a principal in matters concerning the municipal
advisory engagement). It would also provide guidance on what conduct
would be inconsistent with a duty of care (principally failing to act
competently and to provide advice to the municipal entity after making
reasonable inquiry into the representations of the municipal entity's
counterparties, as well as then reasonably feasible alternatives to the
financings or products proposed that might better serve the interests
of the municipal entity).
Section 15B(b)(2)(L)(iv) of the Exchange 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.

All municipal advisors, regardless of their size, have a fiduciary
duty to their municipal entity clients. Because the protection of their
clients is paramount, in this context, the MSRB has concluded that it
is appropriate to impose the same rules on small municipal advisors as
it imposes on larger municipal advisors. However, the MSRB recognizes
that there are costs of compliance. That is the reason the MSRB has
included Appendix A to the Notice. By using Appendix A to provide
disclosure concerning compensation conflicts, small municipal advisors
will satisfy the compensation disclosure requirement of the Notice
without having to retain legal counsel to assist them in the
preparation of such disclosure.

B. Self-Regulatory Organization's Statement on Burden on Competition

The MSRB does not believe that the proposed rule change would
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 with municipal entity clients.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

On February 14, 2011, the MSRB requested comment on a draft of Rule
G-36 (``draft Rule G-36'') and a draft of the Notice (the ``draft
Notice'').\4\ The MSRB received comment letters from: the American
Bankers Association (``ABA''); the American Council of Engineering
Companies (``ACEC''); the American Federation of State, County and
Municipal Employees (``AFSCME''); American Governmental Financial
Services (``AGFS''); B-Payne Group (``B-Payne Group''); the Education
Finance Council (``EFC''); Fi360; Lewis Young Robertson & Burningham,
Inc. (``Lewis Young''); the Michigan Bankers Association (``Michigan
Bankers''); Municipal Regulatory Consulting LLC (``MRC''); the National
Association of Independent Public Finance Advisors (``NAIPFA''); Not
for Profit Capital Strategies (``Capital Strategies''); Phoenix
Advisors, LLC (``Phoenix Advisors''); Public Financial Management
(``PFM''); the Securities Industry and Financial Markets Association
(``SIFMA''); and the Wisconsin Bankers Association (``Wisconsin
Bankers'').
---------------------------------------------------------------------------

\4\ See MSRB Notice 2011-14 (February 14, 2011).
---------------------------------------------------------------------------

Scope of the Rule
Comment: Delay Interpretive Notice until SEC Rule on
Municipal Advisors Finalized. Many commenters \5\ requested that the
MSRB withdraw or delay some or all of the provisions of the Notice
until the SEC has defined ``municipal advisor,'' after which time they
asked that the MSRB afford commenters an additional opportunity to
comment on the Notice. Other comments were outside the scope of the
request for comment on draft Rule G-36 (e.g., suggested modifications
to the definition of ``municipal advisor'') and are not summarized
here.
---------------------------------------------------------------------------

\5\ ABA; SIFMA; Wisconsin Bankers; Michigan Bankers; NAIPFA;
MRC; AFSCME; EFC; Phoenix Advisors; and ACEC.
---------------------------------------------------------------------------

MSRB Response: Because the fiduciary duty applicable to
municipal advisors was effective as of October 1, 2010, the MSRB feels
it is important to provide guidance on basic fiduciary duties
applicable to municipal advisors. The MSRB has requested that the
proposed rule change be made effective on the date that rules defining
the term ``municipal advisor'' under the Exchange Act are first made
effective by the SEC or such later date as the proposed rule change is
approved by the SEC. At that time, the MSRB may propose additional
guidance, if necessary.
Comment: References to Duty of Loyalty and Duty of Care
Too Limiting. Lewis Young suggested said that the MSRB should delete
the clause ``which shall include a duty of loyalty and a duty of care''
from the text of draft Rule G-36 on the theory that it is too limiting

[[Page 56256]]

and that there is a substantial body of state and Federal law governing
fiduciary duty that includes more than these two duties.
MSRB Response: The MSRB has determined not to make this
change to these provisions in proposed Rule G-36. Proposed Rule G-36
would provide that a municipal advisor's fiduciary duty to its
municipal entity client includes a duty of loyalty and a duty of care.
While the duties of loyalty and care are generally recognized as the
principal components of a fiduciary duty, the MSRB recognizes that
certain state fiduciary duty laws address other duties. The use of the
word ``includes'' permits the MSRB to articulate other duties in the
future. Therefore the MSRB has determined not to make this change.
Comment: Clarification of Relationship to Duty of Fair
Dealing. NAIPFA requested that the MSRB clarify its statement that the
duties of fair dealing under Rule G-17 are subsumed within the
municipal advisor's fiduciary duty, and that the fair dealing duties
under Rule G-17 are applicable to municipal advisors when advising
municipal entities.
MSRB Response: The Notice would provide that, ``The Rule
G-36 fiduciary duty to municipal entity clients goes beyond and
encompasses the obligation under MSRB Rule G-17 for municipal advisors,
in the conduct of their municipal advisory activities, to deal fairly
with all persons and not engage in any deceptive, dishonest, or unfair
practice. A violation of Rule G-17 with respect to a municipal entity
client, therefore, would necessarily be a violation of Rule G-36.''
Endnote 3 to the Notice provides examples of conduct by financial
advisors with respect to issuers of municipal securities that has been
found to violate Rule G-17. The MSRB would consider such conduct to
also be a violation of proposed Rule G-36.
Comment: Application of Draft Rule G-36 to Broker-Dealers.
PFM suggested that the MSRB clarify that draft Rule G-36 applies to
broker-dealers who engage in municipal advisory activities (except in
the course of underwriting under Section 2(a)(11) of the Securities
Act).
MSRB Response: The Notice would provide that: ``The term
``municipal advisory activities'' is defined by MSRB Rule D-13 to mean
the activities described in Section 15B(e)(4)(A)(i) and (ii) of the
Exchange Act, whether conducted by a broker, dealer, or municipal
securities dealer (``dealer'') that is a municipal advisor within the
meaning of Section 15B(e)(4) of the Exchange Act or by a municipal
advisor that is not a dealer.''
Comment: Duty When Advising Obligated Person. Capital
Strategies requested that the MSRB clarify the municipal advisor's duty
when a financing alternative for a municipal advisor's obligated person
client is not in the best interests of a municipal entity.
MSRB Response: The Exchange Act does not impose a
fiduciary duty on municipal advisors with obligated person clients.
Accordingly, the MSRB has determined not to make this change in the
Notice relating to proposed Rule G-36. The obligations of a municipal
advisor to an obligated person client would be set forth in a companion
MSRB notice relating to Rule G-17. That notice would provide (in
endnote 7): ``Although a municipal advisor advising an obligated person
does not have a fiduciary duty to the municipal entity that is the
conduit issuer for the obligated person, it still has a fair dealing
duty to the municipal entity.'' Thus, when a municipal advisor is
advising an obligated person, its primary obligation of fair dealing is
to its client. The municipal advisor would not required to act in the
best interest of the municipal entity acting as a conduit issuer,
although the advisor would be prohibited from acting in a deceptive,
dishonest or unfair manner.
Comment: Limitations on Fiduciary Duty. SIFMA requested
that the MSRB clarify that a municipal advisor's fiduciary duty only
applies in connection with a specific transaction or during the course
of a specific engagement and does not apply to solicitation activities
of a municipal advisor, to activities concerning obligated persons, or
when a municipal advisor solicits a municipal entity on its own behalf.
SIFMA requested that the MSRB clarify that the municipal advisor's
fiduciary duty will not apply to those entities exempt from the
definition of municipal advisor (i.e., underwriters, investment
advisors providing investment services, etc.).
MSRB Response: Proposed Rule G-36 would provide that a
municipal advisor's fiduciary duty applies when the advisor has a
municipal entity client. A companion MSRB notice relating to Rule G-17
would specifically provide that a municipal advisor does not have a
fiduciary duty under proposed Rule G-36 to an obligated person client
or a municipal entity it solicits on behalf of a third-party client.
The MSRB also determined to clarify when a municipal entity is
determined to be a client and has revised the Notice so that it would
provide: ``A municipal entity will be considered to be a client of the
municipal advisor from the time that the advisor has been engaged to
provide municipal advisory services (either pursuant to a written
agreement or by informal arrangement) until the time that the agreed
upon engagement ends.''
Duty of Loyalty
Conflicts of Interest; Disclosure.
Comment: Certain Conflicts Not Waiveable. Lewis Young
suggested removing the examples of the types of conflicts that must be
disclosed because this is not necessary and because certain of the
conflicts concerning third-party payments should be considered not to
be waiveable.
MSRB Response: The MSRB has determined not to revise the
Notice to remove the examples of conflicts, because it is important to
provide this guidance to municipal advisors. However, the revised
Notice would clarify that disclosures of conflicts and consent by the
recipient would not suffice to allow a municipal advisor to undertake a
municipal advisory engagement if the conflicts are so significant that
they are unmanageable.
Comment: Substitute Term ``Engagement'' for
``Relationships.'' Lewis Young suggested that, because the term
``relationships'' was vague and overbroad, the term ``engagement''
should be used instead, because such term was clear and measurable. It
said that this substitution would also avoid the suggestion that
municipal advisors were subject to a higher standard than that
applicable to attorneys. It also said that only those relationships
that the advisor reasonably feels will cloud its judgment should be
required to be disclosed; otherwise, it said, important relationships
may get lost in the disclosure of a long list of items.
MSRB Response: The MSRB does not agree with this comment
and therefore has determined not to make the changes suggested. The
cases cited in the endnotes to the Notice include examples of informal
relationships of which issuers should have been made aware.
Furthermore, if a relationship is so significant that it would
materially impair an advisor's duty to act in the best interests of its
client, the municipal advisor would be precluded from entering into the
engagement. Disclosure and informed consent would not suffice.
Comment: Disclosure of Conflicts of Interest. SIFMA said
that disclosure of conflicts should be based on reasonableness and upon
actual knowledge of personnel who are specifically involved in
municipal

[[Page 56257]]

advisory activities. It said that requiring large organizations to
centralize and maintain information would be costly and could also risk
compromising confidentiality barriers.
MSRB Response: The MSRB has addressed these concerns and
has revised the Notice so that it would provide that the advisor must
disclose all material conflicts ``of which it is aware after reasonable
inquiry.'' The MSRB has also determined to apply this standard to
conflicts ``existing at the time the engagement is entered into, as
well those discovered or arising during the course of the engagement.''
The MSRB recognizes the issues concerning compromising
confidentiality barriers when making inquiries about other
relationships with municipal entities. Nevertheless, the MSRB believes
that actual knowledge of only those persons involved in the municipal
advisory activity is not sufficient. Section 15B(e)(4) of the Exchange
Act does not limit the term ``municipal advisor'' to natural persons. A
municipal entity client retains a municipal advisor firm, not an
individual that works for the firm. Accordingly, it is the conflicts of
the firm that must be disclosed. The revised Notice would clarify that
persons preparing the conflicts disclosure must make a reasonable
inquiry into the activities of their firm to determine what conflicts
may exist. This may include inquiry of persons in addition to those
specifically engaged in the municipal advisory activity. In addition,
the revised Notice would provide that reasonable inquiry will continue
to apply during the course of the engagement to address conflicts
discovered or arising after the engagement has been entered into.
Comment: Disclose Only General Conflicts of Interest.
SIFMA said that generalized disclosure of conflicts, rather than
disclosure tailored to the individual client, should be permitted,
allowing the municipal entity to request additional disclosure. SIFMA
argued that requiring a municipal advisor to undertake an
individualized investigation relating to conflicts applicable to the
specific municipal entity, or analyzing the exact implications of the
conflict applicable to the municipal entity client, would be time
consuming and expensive. It said that the municipal entity could
request more information and decide if the expense was worth it.
SIFMA also said that a municipal advisor should be required to
disclose the applicable conflicts only once, in a brochure disclosing
material conflicts, and not be required to re-disclose or reconfirm on
a transaction by transaction basis unless new material conflicts were
discovered. SIFMA said that the municipal advisor should not be
required to re-disclose conflicts previously disclosed in a request for
proposal (``RFP'').
MSRB Response: The MSRB has determined not to make the
suggested changes in the Notice. Generalized disclosure, without a
discussion of the specific conflicts that may relate to the municipal
entity client, is not sufficient to alert a municipal entity client to
specific conflicts and is an insufficient basis for informed consent.
The Notice would not require disclosures to be made more than once per
issue. An RFP response may be an appropriate place to make required
disclosures as long as the proposed structure of the financing is
adequately developed at that point to permit the specific disclosures
required by the Notice.
Comment: Conflicts of Interest Should be Addressed in Rule
G-23. MRC suggested that the requirements to disclose conflicts and to
obtain informed consent would be more appropriately addressed in MSRB
Rule G-23, and that the requirements should be removed from the Notice.
MSRB Response: The MSRB disagrees with this comment and
has therefore determined not to make the suggested changes. Rule G-23
only concerns financial advisory activities of dealers. It also does
not impose a fiduciary duty.
Comment: Rule Recognizes Essential Duties of Loyalty and
Due Care. Fi360 applauded the MSRB for recognizing the duties of
loyalty and due care as essential obligations under the fiduciary
standard of care. It also said the Notice amply captured key principles
that underlie the duties of loyalty and care. AFSCME also applauded the
efforts of the MSRB to protect municipal entities from self-dealing and
other deceptive practices, and said that strong protections were
required for municipal entities.
MSRB Response. The MSRB appreciates these comments.
Comment: Due Diligence To Determine Authority of Municipal
Official. SIFMA requested that the MSRB clarify the level of due
diligence required to determine if an official has the authority to
bind the municipal entity by contract, and suggested that a
representation by the official that it had the requisite authority to
execute should be sufficient, absent actual knowledge by the municipal
advisor that such representation was false.
MSRB Response: The MSRB has revised the Notice so that it
would provide that a municipal advisor is only required to have a
reasonable belief that it is making required disclosures to officials
with the authority to bind the issuer. This change would also be made
to the informed consent provisions of the Notice.
Conflicts of Interest; Unmanageable Conflicts
Comment: Principal Transactions. ABA and SIFMA suggested
that principal transactions should not be prohibited as unmanageable
conflicts because other Federal and state laws permit entities subject
to a fiduciary duty to effect principal transactions with clients after
disclosure and informed consent. They said that traditional banking
activities, including accepting deposits and foreign exchange
transactions, should be permitted, arguing that not permitting
municipal advisors to engage in these transactions would create an
unfair advantage for investment advisors and swap dealers, among
others, that have the ability to effect these types of transactions.
They said that such a ban would also effectively limit municipal
entities' access to critical products and services. SIFMA also proposed
that the prohibition on principal transactions not prohibit a municipal
advisor or affiliate from serving as a trustee and that the prohibition
should not apply to advisory transactions if the principal transactions
were effected by ``distant cousin'' affiliates of a municipal advisor.
ABA suggested that the MSRB propose exceptions for associated persons,
similar to the exception provided in a 1978 interpretation \6\ of MSRB
Rule D-11, which excludes, solely for purposes of the fair practice
rules, persons who are associated ``solely by reason of a control
relationship,'' unless the affiliate is otherwise engaged in municipal
advisory activities.
---------------------------------------------------------------------------

\6\ The ABA's citation is actually to the SEC's order approving
Rule D-11, a portion of which is reprinted in the MSRB Rule Book.
---------------------------------------------------------------------------

MSRB Response: The revised Notice would provide that a
municipal advisor will not be considered to have an unmanageable
conflict as a result of acting as principal when: (i) Providing
investments to the municipal entity on a temporary basis to ensure
timely delivery for closing; (ii) engaging in activities permitted
under Rule G-23; (iii) it is a municipal advisor solely because it
recommends investments or municipal financial products provided or
offered by it to a municipal entity as a counterparty, but is not
described in (iv); or (iv) acting as a swap or security-

[[Page 56258]]

based counterparty to a municipal entity represented by an
``independent representative,'' as defined in the Commodity Exchange
Act or the Exchange Act, respectively. Once the SEC has completed its
rulemaking on the definition of ``municipal advisor,'' the MSRB will
consider whether additional exceptions are appropriate.
Comment: Engineers as Municipal Advisors. ACEC said that,
under certain circumstances, some engineers, if subject to a fiduciary
duty by reason of being included in the definition of ``municipal
advisor,'' may have direct conflicts with their municipal entity
clients because of the engineers' professional and ethical duties. It
said that an engineer's ethical duties require it to hold the safety,
health, and welfare of the public paramount and that an engineer's duty
to render independent judgments might in some cases conflict with its
duty of loyalty to its municipal entity client, particularly if the
expectations of its client differed from the engineer's independent
judgment.
MSRB Response: The MSRB has determined not to make any
changes to the Notice with respect to this comment. The MSRB recognizes
that members of other professions that also serve as municipal advisors
may have concurrent professional duties and standards and the MSRB
agrees that an advisor is required to exercise its independent
professional skill and judgment in performing its role. The rule does
not require that the advisor abandon its professional standards in
order to render opinions consistent with the client's expectations.
Fee Splitting; Prohibited Payments
Comment: Compensation for Related Services. SIFMA and ABA
requested further clarification about fee-splitting and related
compensation arrangements, and suggested that compensation for certain
traditional banking services (relating to corporate trust and mutual
funds), such as shareholder servicing fees and 12b-1 fees, be permitted
with full disclosure and informed consent.
MSRB Response. Endnote 6 to the Notice provides examples
of fee-splitting arrangements. The Notice also provides exceptions to
the general rule that a municipal advisor that serves as a principal
has an unmanageable conflict. Depending upon the SEC's definition of
``municipal advisor,'' the MSRB may propose additional exceptions, but
the MSRB is unwilling to do so at this time.
Comment: Prohibited Payments to Affiliated Solicitors.
SIFMA also requested further guidance on prohibited payments by
municipal advisors to solicitors and argued that payments to affiliated
solicitors should not be prohibited because the definition of municipal
advisor adopted by the Dodd Frank Act only restricts payments to
independent solicitors.
MSRB Response: The MSRB has determined not to make the
suggested changes. The cases cited in the endnotes to the Notice
demonstrate the inappropriate role that third-party payments have
played in many municipal securities financings. The exceptions made by
the Notice would only concern issuer-permitted payments and payments to
parties that are themselves regulated by the MSRB.
Compensation; Excessive Compensation
Comment: Definition of Excessive Compensation. NAIPFA,
SIFMA, and B-Payne Group requested further clarification on the
definition of ``excessive compensation.'' NAIPFA suggested certain
criteria, including, among other things, the time and labor required,
the novelty and difficulty of the issue involved, and the skill
requisite to perform the municipal advisory services properly; the fee
customarily charged in the locality for similar municipal advisory
services; the amount involved and the results obtained; the nature and
length of the professional relationship with the client; the
experience, reputation, and ability of the municipal advisor or
municipal advisors performing the services; and whether the fee is
fixed or contingent. B-Payne Group objected to any evaluation of
whether its fees were excessive, arguing that no regulator was in a
position to evaluate the reasonableness of the municipal advisor's fee.
SIFMA suggested that a fully disclosed and negotiated agreement, absent
fraud, was sufficient to guard against excessive compensation.
MSRB Response: The MSRB has revised the Notice so that it
would incorporate some of the factors noted in the comment letters. The
revised Notice would describe excessive compensation as compensation
that is so disproportionate to the nature of the municipal advisory
services performed as to indicate that the municipal advisor is not
acting in the best interests of its municipal advisory client. Further,
the revised Notice would provide that ``the MSRB recognizes that what
is considered reasonable compensation for a municipal advisor will vary
according to the municipal advisor's expertise, the complexity of the
financing, and the length of time spent on the engagement, among other
factors.'' As this language recognizes, many factors may appropriately
affect the amount of the fee, and the specific factors listed in the
Notice would not be exclusive. Thus, it may be that the various other
factors noted by commenters could have an impact on the compensation
paid to a municipal advisor. In all cases, the municipal advisor must
be able to support the legitimacy of its fees.
Compensation; Forms of Compensation
Comment: Disclosure of Conflicts Confusing and
Unnecessary. Several commenters \7\ suggested that the MSRB delete
Appendix A to the Notice (Disclosure of Conflicts with Various Forms of
Compensation) and the requirement of the Notice that municipal advisors
disclose the conflicts with various forms of compensation. Commenters
argued that: (i) Such disclosure was unnecessary and that including it
would detract from the importance of the rest of the rule; (ii)
statements about imbedded conflicts in compensation would be confusing
to municipal entities because underwriters (who, they said, have
inherent conflicts as both purchasers and distributors of the municipal
entity's securities) are not required to disclose this information,
whereas municipal advisors, who do not have these inherent conflicts,
are nevertheless required to disclose such possible conflicts; and
(iii) contingent fees do not affect professional performance. Other
commenters argued that the fiduciary duty applicable to municipal
advisors was sufficient to guard against excessive compensation. NAIPFA
requested that, if this requirement were retained, a similar
requirement be applicable to underwriters. B-Payne Group agreed that
fees of all participants, including bond lawyers, should be disclosed.
MRC suggested that any disclosure requirements were more appropriately
addressed in Rule G-23.
---------------------------------------------------------------------------

\7\ B-Payne Group, Lewis Young, MRC, NAIPFA, PFM, and SIFMA.
---------------------------------------------------------------------------

AGFS said that, among other things, the proposal to require that
firms clarify for clients the advantages and disadvantages of various
forms of advisor compensation was excellent. It said that too many
municipal issuers are gullible regarding the use of contingent
compensation payable only after transactions are completed and that
they do not think through the long-term costs and other relevant
implications of contingent compensation that can place advisors, upon
whom the issuers rely heavily, in the unfortunate position of
sacrificing months of work without compensation when it becomes

[[Page 56259]]

apparent (or should be apparent to a market financial professional)
that a transaction is not in the issuers' best interests. AGS said
that, unfortunately, there are advisors who would plow ahead in order
to avoid substantial financial loss, rather than informing the issuer
clients either (1) not to proceed or (2) to alter the structure or
approach.
MSRB Response: The MSRB has determined not to eliminate
Appendix A from the Notice. Because municipal advisors are fiduciaries
with respect to their municipal entity clients, the MSRB considers it
essential that they disclose all material conflicts to their clients.
Appendix A was included in the Notice for the benefit of small
municipal advisors to help them avoid the need to hire an attorney to
prepare such compensation conflicts disclosure. Use of Appendix A would
not be mandatory and municipal advisors would be free to draft their
own disclosure addressing these conflicts.
Pursuant to Section 15B(e)(4)(C) of the Exchange Act, dealers are
not municipal advisors when they are serving as underwriters. Even so,
MSRB Rule G-17 (on fair dealing) would apply to them when they engage
in municipal securities activities with issuers of municipal
securities. The MSRB recognizes that underwriters would not be subject
to the same requirement to disclose conflicts associated with various
forms of compensation under Rule G-17. It is appropriate to interpret
Rule G-17 differently for arm's-length counterparty relationships on
the one hand (such as underwriters appropriately maintain with issuers)
and advisory relationships on the other.
The MSRB notes that it does not have jurisdiction over bond
lawyers, unless they are functioning as municipal advisors, and,
therefore, in most cases, may not require them to disclose compensation
conflicts.
Comment: Limit Disclosure of Conflicts to Form of
Compensation Mandated by Issuer. NAIPFA suggested that disclosure of
conflicts be limited to the conflicts applicable to the form of
compensation methodology at the time the compensation methodology was
proposed. NAIPFA also suggested that ``pitches'' or other discussions
of ideas with municipal entities prior to engagement should not require
delivery of the disclosure. NAIPFA suggested that the disclosures
should not be required when the municipal entity dictated the form of
compensation, arguing that discussion of conflicts in this instance
would not advance the duty of loyalty to the municipal entity client.
MSRB Response: The MSRB has determined to revise the
Notice so that it would require that conflicts disclosures, including
those regarding compensation, need only be delivered before the
engagement of the municipal advisor, unless a conflict is discovered or
arises later. Furthermore, the revised Notice would provide that ``if
the municipal entity client has required that a particular form of
compensation be used, the compensation conflicts disclosure provided by
the municipal advisor need only address that particular form of
compensation.'' If the form of compensation is not required by the
municipal entity, however, the municipal advisor would be required to
disclose and discuss the conflicts associated with various forms of
compensation.
Comment: Authority of Municipal Entity Officials to
Consent to Disclosures. Several commenters suggested that, in
determining the authority of a municipal entity official to enter into
a contract, to receive various disclosures, and to deliver informed
consent, a municipal advisor should be permitted to rely on the
apparent authority of an official to acknowledge the conflicts
disclosure. NAIPFA suggested that the municipal advisor be able to rely
on the designation by the municipal entity of the primary contact for
the engagement as evidence of its authority unless the municipal
advisor has reason to believe that the official does not have the
requisite authority. SIFMA suggested that the municipal advisor be able
to rely on a representation of the official as to its apparent
authority.
MSRB Response: As noted above under ``Conflicts of
Interest; Disclosure,'' the MSRB determined to revise the Notice so
that it would provide that a municipal advisor is only required to have
a reasonable belief that it is making required disclosures to, and
receiving informed consent from, officials with the authority to bind
the issuer.
Comment: Consent Presumed With Receipt of Written
Agreement. NAIPFA suggested that a municipal advisor be permitted to
presume consent to compensation conflicts disclosure if it receives an
executed contract, or verbal agreement that a written engagement letter
(or similar document) has been accepted, or written or verbal
acknowledgement that the advisor has been selected following an RFP
process in which the form of compensation was appropriately disclosed.
MSRB Response: The MSRB had determined not to make changes
to the Notice in response to this comment because the following
provisions of the Notice would address this comment: ``The disclosures
described in this paragraph must be provided as described above under
``Duty of Loyalty/Conflicts of Interest/Disclosure Obligations.'' That
section of the Notice would provide: ``For purposes of proposed Rule G-
36, a municipal entity will be deemed to have consented to conflicts
that are clearly described in its engagement letter or other written
contract with the municipal advisor, if the municipal entity expressly
acknowledges the existence of such conflicts. If the officials of the
municipal entity agree to proceed with the municipal advisory
engagement after receipt of the conflicts disclosure but will not
provide written acknowledgement of such conflicts, the municipal
advisor may proceed with the engagement after documenting with
specificity why it was unable to obtain their written
acknowledgement.''
Duty of Care
Necessary Qualifications.
Comment: Restrictions on Undertaking Engagements Are
Unnecessary. Lewis Young suggested that the requirement that the
``municipal advisor should not undertake a municipal advisory
engagement for which the advisor does not possess the degree of
knowledge and expertise needed to provide the municipal entity with
informed advice'' be removed, arguing that it was unnecessary and it
left out many other aspects of the general fiduciary duty of care and
``unbalanced'' the implications of the general duty.
MSRB Response: The MSRB has determined not to make any
changes to the Notice in response to this comment. The MSRB disagrees
with this comment because it considers the requisite knowledge and
expertise to be an essential element of the duty of care. The cases
cited in endnote 20 to the Notice provide examples of instances in
which financial advisors violated this duty.
Consideration of Alternatives
Comment: Requirement Unnecessary. Lewis Young suggested
that this requirement should be removed as it was unnecessary.
MSRB Response: The MSRB disagrees with this comment and
considers this requirement to be a fundamental distinction between a
fiduciary and an arm's length counterparty, such as an underwriter.
Comment: Limit Obligations to Terms of Contract. SIFMA
argued that a municipal advisor should be required to

[[Page 56260]]

do only what the municipal entity contracts for and that imposing other
duties will impose additional costs and will cause extensive
negotiation on the limitations clauses in contracts. Further, SIFMA
argued that an implied duty to review alternatives should not apply
where the form of engagement letter is non-negotiable because the
inability to negotiate a limited engagement clause will reduce the
number of municipal advisors who offer services.
MSRB Response: The MSRB has determined not to make any
changes to the Notice in response to this comment. The MSRB expects
that municipal advisors that wish to limit their engagements with
municipal entities will do so in writings (whether as part of
engagement letters or separately) that limit the scope of their
engagements to particularly enumerated items or which state that any
services not specified in the writing will not be provided by the
advisor. This should impose no measurable additional cost on the
advisor or the municipal entity.
Duty of Inquiry
Comment: Scope of Inquiry. Lewis Young said that the
requirement to conduct reasonable inquiry regarding representations set
forth in a certificate should be governed by the terms of the
certificate, which should show the scope of inquiry. SIFMA requested
more guidance on the required scope of a factual investigation and on
the nature and scope of any permitted qualifications, and whether a
municipal advisor could disclaim the duty altogether in its engagement
letter or later, noting that it would be impossible to anticipate all
limitations on this duty at outset of engagement. NAIPFA suggested that
the MSRB clarify its statements about a municipal advisor's duty of
inquiry under G-36 and G-17 to form a reasonable basis for its
recommendations.
MSRB Response: The MSRB has determined not to make the
suggested changes. The Notice would not permit the waiver of duties
imposed by proposed Rule G-36, as interpreted by the Notice, if they
are within the scope of the municipal advisor's engagement. If it is
within the scope of the municipal advisor's engagement to prepare a
certificate that will be relied upon by the issuer, the municipal
advisor would be required to conduct a reasonable inquiry into the
facts that underlie the certificate. For example, review of the
official books of the issuer and other factual information within the
municipal advisor's control might assist the municipal advisor in
forming a reasonable basis for its certificate. However, if the
certificate relies on the representations of others or facts not within
the municipal advisor's control, additional inquiry on the part of the
municipal advisor might be required.
The MSRB notes that some certificates that municipal advisors
provide already have the potential to subject the advisor to penalties
under Section 6700 of the Internal Revenue Code. An Internal Revenue
Service publication on Section 6700 \8\ provides: ``Participants [in a
bond financing] can rely on matters of fact or material provided by
other participants necessary to make their own statements or draw their
own conclusions, unless they have actual knowledge or a reason to know
of its inaccuracy or the statement is not credible or reasonable on its
face.'' The Internal Revenue Service summarized the legislative history
of Section 6700. See H. Conf. Rep. No. 101-247, 101st Cong., 1st Sess.
1397.
---------------------------------------------------------------------------

\8\ See Office of Chief Counsel, Internal Revenue Service,
Memorandum No. 200610018, Application of Section 6700 Penalty with
Respect to Various Participants in Tax-Exempt Bond Issuance (Feb. 3,
2006).
---------------------------------------------------------------------------

With respect to clarifying the statements in the Notice concerning
the municipal advisor's duty to form a reasonable basis for any
recommendation, the MSRB has determined not to make any changes to the
Notice other than those directed to specific circumstances in the
Notice (e.g. Duty of Inquiry, Consideration of Alternatives, etc.). The
MSRB notes that each recommendation, and the basis for such
recommendation, will be dependent on facts and circumstances and that
the statements in the Notice are intended as general guidelines.
Comment: Due Diligence. Lewis Young and SIFMA said that
the requirement for a municipal advisor to use due diligence when
preparing an official statement suggested that the municipal advisor
(whose duties are to an issuer) had the duties of an underwriter (whose
duties are to investors). Lewis Young said that this requirement is
inconsistent with an advisor's obligation, which is to advise ``in a
secondary role to the issuer as principal as to disclosure duties, as
well as duplicating the duties of an underwriter.'' Lewis Young also
noted that a municipal advisor owes a duty to the municipal entity, not
to investors, and the municipal advisor's obligations in respect of the
disclosure process are to explain the process to the issuer, to make
recommendations on the structure and content of the disclosure
document, and to recommend competent counsel to prepare.
MSRB Response: The MSRB has determined to revise the
Notice so that it would address these concerns. The language in the
Notice upon which this comment is based covers the situation in which
the municipal advisor prepares all, or substantially all, of the
official statement, exercising discretion as to the content of
disclosures. This is often true in the case of competitive
underwritings. Under these circumstances, the advisor owes a duty to
the municipal entity to make reasonable inquiries in order to help
ensure the appropriate disclosures are made in the official statement.
The revised Notice would no longer require that the advisor exercise
due diligence, and would further provide that the municipal advisor
``owes a duty to the municipal entity to make reasonable inquiries in
order to help ensure the appropriate disclosures are made in the
official statement.''
Permissible Limitations On Scope of Engagement
Limitations.
Comment: Outline Scope of Duties in Engagement. Both SIFMA
and NAIPFA suggested that municipal advisors should be permitted to
outline the scope of their duties in an engagement, rather than
outlining the exclusions and limitations. NAIPFA noted that it would be
unreasonable to subject a municipal advisor to a fiduciary duty with
respect to services that were beyond the scope of the parties'
agreement. Further, it said that an issuer had no reason to assume that
services not specified in writing would be performed. The municipal
advisor should be held to the duties it had agreed to undertake, and be
able to include a blanket statement relating to the matters excluded
from the engagement.
MSRB Response: The MSRB has determined not to make any
changes to the Notice in response to this comment. The MSRB expects
that municipal advisors that wish to limit their engagements with
municipal entities will do so in writings (whether as part of
engagement letters or separately) that limit the scope of their
engagements to particularly enumerated items or which state that any
services not specified in the writing will not be provided by the
advisor. This should impose no measurable additional cost on the
advisor or the municipal entity.
Disclosure of Pre-Formed Judgment on Appropriateness of Transaction or
Product
Comment: Remove Requirement to Disclose Advisor's Pre-
Formed Opinion.

[[Page 56261]]

SIFMA suggested that the MSRB reconsider its position on permitting the
municipal advisor to limit the scope of its engagement while requiring
it to disclose any pre-formed opinion it has on matters not within the
scope of the engagement. SIFMA said that this was burdensome, detracted
from the scope of the limitations, and would effectively require the
municipal advisor to consider the appropriateness of the financing or
product (which it had excluded from its engagement) to counter any
hindsight judgment.
MSRB Response: The MSRB has determined to revise the
Notice so that it would no longer include this requirement. While the
Notice would not require the municipal advisor to conduct reasonable
inquiry to form such an opinion, the MSRB realizes that some municipal
advisors might feel obliged to do so to avoid being questioned in
hindsight about whether they had, in fact, formed an opinion on
appropriateness before being retained.
Scope of Engagement
Comment: Define Term of Engagement. SIFMA suggested that
the Notice include a definition of ``engagement,'' and define when the
municipal advisor's obligation will commence and terminate pursuant to
a written engagement letter. Absent a written engagement letter, SIFMA
suggested that an engagement should terminate on the reasonable
expectations of the parties, or when the related transaction has been
concluded.
MSRB Response: By the use of the word ``engagement,'' the
MSRB means the municipal advisory assignment or other scope of work for
which the municipal entity has retained the municipal advisor. When a
municipal advisor is engaged or retained by the municipal entity, the
municipal entity would become the client of the municipal advisor and
the fiduciary duty under proposed Rule G-36 would begin to apply. It
would continue to apply until the engagement is complete.
Comment: Incorporate Requirements of Advisory Contracts in
Rule G-23. MRC suggested that any requirements relating to the content
of advisory contracts be incorporated into existing rules such as Rule
G-23, rather than by interpretation. MRC also suggested clarification
of the various statements relating to appropriateness and incorporation
of such statements in MSRB Rule G-19 (on suitability).
MSRB Response: The MSRB disagrees with this comment and
has therefore determined not to make the suggested changes. As noted
above, Rule G-23 only concerns financial advisory activities of broker-
dealers. It also does not impose a fiduciary duty. Rule G-19 only
imposes a duty of suitability upon dealers and, even then, only in
connection with transactions in municipal securities recommended to
customers.\9\ The MSRB has determined not to amend that rule at this
time.
---------------------------------------------------------------------------

\9\ Under MSRB Rule D-9: Except as otherwise specifically
provided by rule of the Board, the term ``customer'' shall mean any
person other than a broker, dealer, or municipal securities dealer
acting in its capacity as such or an issuer in transactions
involving the sale by the issuer of a new issue of its securities.
---------------------------------------------------------------------------

Other Comments
Comment: Other Rules May Impose Conflicting Standards.
Various commenters \10\ noted that several regulatory agencies either
have in place or are currently promulgating rules that concern parties
that might be subject to draft Rule G-36 and that lack of coordination
with these agencies could lead to conflicting standards applicable to
such parties. They said that the MSRB and other regulatory agencies
need to coordinate their respective guidance and AFSCME suggested that
these agencies offer informal guidance such as webinars to aid market
participants.
---------------------------------------------------------------------------

\10\ ABA; AFSCME; Michigan Bankers; SIFMA; and EFC.
---------------------------------------------------------------------------

MSRB Response: The MSRB has been coordinating with other
regulators in areas of overlap. For example, the provisions of the
Notice concerning the provision of swap advice use the same language as
found in Title VII of Dodd-Frank and the proposed Commodity Trading
Futures Commission (``CFTC'') business conduct rule for swap dealers
and major swap participants.\11\ Further, the MSRB has conducted and
will continue to conduct webinars and various outreach events to
explain its rulemaking efforts.
---------------------------------------------------------------------------

\11\ See Federal Register Vol. 75, No. 245 (December 22, 2010).
---------------------------------------------------------------------------

Comment: Manner of Regulation and Cost of Compliance. B-
Payne Group expressed the view that the MSRB should regulate municipal
advisors by getting ``experienced personnel on the ground in regional
markets and charge them with staying on top of situations,'' rather
than regulating municipal advisors as the MSRB regulates dealers. It
argued for exemptions from MSRB rules for small municipal advisors and
said the cost of compliance for such advisors would outweigh the
regulatory benefit. Other parts of the comment letter addressed matters
that were outside the scope of the request for comment on draft Rule G-
36 (e.g., professional qualifications testing, training for local
finance officials) and are not summarized here.
MSRB Response: For regulation of municipal advisors to be
fair, all municipal advisors must know what rules apply to them. The
Exchange Act itself imposes a fiduciary duty on municipal advisors and
the proposed rule change provides guidance to municipal advisors on
what it means to have a fiduciary duty so they can tailor their conduct
accordingly. Without such guidance, ``experienced personnel on the
ground'' would likely enforce the Exchange Act in an inconsistent
manner, which the MSRB doubts that B-Payne Group would consider fair.
As stated above, all municipal advisors, regardless of their size,
have a fiduciary duty to their municipal entity clients. Because the
protection of their clients is paramount, in this context, the MSRB has
concluded that it is appropriate to impose the same rules on small
municipal advisors as it imposes on larger municipal advisors. However,
the MSRB recognizes that there are costs of compliance. That is the
reason the MSRB has included Appendix A to the Notice. By using
Appendix A to provide disclosure concerning compensation conflicts,
small municipal advisors would be able to satisfy the compensation
disclosure requirement of the Notice without having to retain legal
counsel to assist them in the preparation of such disclosure.
Comment: Implementation Period. SIFMA suggested that
because Rule G-36 would subject municipal advisors to rules they are
not currently subject to, the MSRB should consider providing for an
implementation period of no less than one year.
MSRB Response. The MSRB recognizes that some municipal
advisors may be subject to rules that are not currently applicable.
However, the appropriate implementation period will depend upon the
provisions of the SEC's rule relating to municipal advisors.

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

[[Page 56262]]

(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 Exchange Act. Interested persons are also
invited to submit views and arguments as to whether they can
effectively comment on the proposed rule change prior to the date of
final adoption of the Commission's permanent rules for the registration
of municipal advisors. 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-2011-14 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-2011-14. 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 Internet 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-2011-14 and should be submitted on or before
October 3, 2011.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-23259 Filed 9-9-11; 8:45 am]
BILLING CODE 8011-01-P