Appeal body upholds decision to deny exemptive relief under Municipal Securities Rulemaking Board (MSRB) Rule G-37 because the firm failed to implement compliance procedures sufficient to educate its municipal finance professionals about the Rule and an associated person did not understand that he was a municipal finance professional.


February 28, 1997

 

A
Counsel for Firm X
Address

 

RE: Firm X MSRB Rule G-37 Exemption Request

 

Dear A:

 

The Fixed Income Committee of NASD Regulation, Inc. has reviewed your client’s appeal for exemptive relief and has determined to deny the request. The Committee found that the firm failed to implement compliance procedures sufficient to educate its municipal finance professionals regarding the particular provisions of the Rule, or otherwise prevent the occurrence of the contributions. The Committee noted the MSRB's guidance that a situation involving a lack of understanding by a municipal finance professional of Rule G-37 or any of its particular provisions is not sufficient to justify the granting of an exemption. Moreover, the MSRB has provided guidance that it is not sufficient to justify granting an exemption based on a situation where the associated person was unaware at the time of the contribution that he was a municipal finance professional by virtue of any of the activities listed in the rule's definition of municipal finance professional.

 

Very Truly Yours,

 

 

Alden S. Adkins
General Counsel

 

cc: Christopher A. Taylor, MSRB