SEC has approved an amendment to rule G-32, on disclosures in connection with new issues, relating to delivery of official statements to customers purchasing new issue VRDOs
On July 14, 1998, the Securities and Exchange Commission approved an amendment to rule G-32, on disclosures in connection with new issues, which permits brokers, dealers and municipal securities dealers ("dealers") selling variable rate demand obligations qualifying for the exemption provided under subparagraph (d)(1)(iii) of Securities Exchange Act Rule 15c2-12 to customers during the underwriting period to deliver the official statement in preliminary form to the customer by settlement.1 The amendment requires that a dealer deliver a written notice with the preliminary official statement to the effect that the official statement in final form will be sent to the customer within one business day of receipt and that the official statement in final form be sent to the customer within one business day of receipt. If no official statement in preliminary form is being prepared, the dealer is obligated to deliver by settlement the written notice regarding the official statement in final form and to send the official statement in final form upon receipt.2 Of course, dealers are permitted to continue delivering official statements in final form to customers by settlement, to the extent that they are then available.
For further details on the amendment, see the Notice of Filing dated March 25, 1998.
A further amendment to rule G-32 was approved by the SEC on July 17, 1998. For the complete text of rule G-32, as amended, please click here.
July 21, 1998
ENDNOTES
1 Securities Exchange Act Rel. No. 40197 (July 14, 1998), as corrected by Securities Exchange Act Rel. No. 40197A (July 23, 1998).
2 If no official statement in final form is being prepared, the dealer would deliver to the customer by settlement the official statement in preliminary form, if any, and written notice to the effect that an official statement in final form is not being prepared. If neither a final nor a preliminary official statement is being prepared, the dealer is obligated to deliver by settlement the written notice to the effect that no official statement in final form is being prepared.
