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} <br /> ,*trrtr 5 f 1"m th f Izrrnlirut Graz #801 <br /> 0 .epurtmrnt (*tate Treasurer <br /> HARLAN E. BOYLES State and Local Government Finance Division — ROBERT M. HIGH <br /> TREASURER and the Local Government Commission DEPUTY TREASURER <br /> ...- <br /> July 8, <br /> • <br /> MEMORANDUM <br /> TO: Locally Elected Officials <br /> FROM: Robert M. High f1l, - - _: :._`= <br /> SUBJECT: Rule G-37 <br /> The Municipal Securities Rule Making Board ( "MSRB" ) with the <br /> approval of the Securities and Exchange Commission ( "SEC" ) has <br /> adopted Rule G-37 which became effective April 25, 1994 setting <br /> out campaign financing rules which, if not followed, could have a <br /> significant adverse impact upon the issuance and the cost of <br /> borrowing by all agencies of government, both state and local. <br /> Rule G-37 is directed toward municipal underwriters, banks <br /> (generally, the officers designated by the bank's board of <br /> directors as responsible for the day-to-day conduct of the bank' s <br /> municipal securities dealer activities and any member of the <br /> separately identifiable department or division of the bank dealer) <br /> and other municipal finance professionals and .dealers. The Rule <br /> prohibits these institutions and persons from engaging in any <br /> securities business with any government within two years after a <br /> campaign contribution is made to a candidate or office holder of <br /> such government who directly or indirectly could influence the <br /> award of municipal bond business . <br /> Rule G-37 is detailed and complex as to the meaning of a dealer, a <br /> municipal finance professional, an associated person, an official <br /> of an issuer whose office is responsible for or can influence the <br /> outcome of the hiring of a dealer for municipal securities <br /> business and other definitional terms and terms of application and <br /> jurisdiction. In fact, on May 24 , the MSRB asked the SEC to <br /> approve several amendments to Rule G-37 covering such matters as <br /> protecting firms that make good faith efforts to comply with the <br /> Rule from being penalized for isolated violations by employees , <br /> making clear that the Rule does not cover the public sale of bonds <br /> by competitive sale as opposed to negotiated sale and also making <br /> clear that contributions to an incumbent or candidate for governor <br /> are covered by the Rule, assuming the governor has authority to <br /> appoint boards that determine bond issuance. The amendments <br /> proposed by the MSRB were approved by the SEC on June 3 . <br /> 825 North Salisbury Street. Raleigh, North Carolina 27603-1388 (919) 733-8064 (FAX 783-9586) <br /> An Eau&Onnartvnity J A flirts,niirw A',tinn F'rnninuer <br />