New Rule G-38, on Solicitation of Municipal Securities Business, and New Forms G-37, G-37x and G-38t Become Effective

The Municipal Securities Rulemaking Board’s (“MSRB”) revised Rule G-38, on solicitation of municipal securities business, has become effective.  As of August 29, 2005, brokers, dealers and municipal securities dealers (“dealers”) are prohibited from paying persons who are not affiliated with the respective dealers for soliciting municipal securities business on their behalf.  A summary of the new rule is available in MSRB Notice 2005-44 (August 18, 2005) at the MSRB’s web site (www.msrb.org).

In conjunction with the effectiveness of the rule change, the MSRB has revised Form G-37 (formerly known as Form G-37/G-38) and Form G-37x and has created new Form G-38t.  On and after August 29, 2005, dealers must use new Forms G-37 and G-37x to report all required information under Rule G-37, on political contributions and prohibitions on municipal securities business, and new Form G-38t to report all required information under revised Rule G-38, including any previously unreported information on the use of consultants prior to August 29, 2005.  Form G-37/G-38 is no longer accepted.  Dealers must use the new forms when reporting information for the third quarter 2005, which must be sent to the MSRB by October 31, 2005.

To assist dealers in using the new forms, the MSRB has published Instructions for Forms G-37, G-37x and G-38t, which is available at the MSRB’s web site.

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Questions regarding this notice and amended Rule G-38 may be directed to Ernesto A. Lanza, Senior Associate General Counsel.

August 29, 2005