Automatic Exemptions
Dealers prohibited from engaging in municipal securities business under this rule may qualify for an automatic exemption from the rule if three requirements are met. Automatic exemptions are only available where:
- • The dealer discovered the political contribution that prohibited the dealer from engaging in municipal securities business within four months from the date of the contribution
- • The contribution did not exceed $250
- • The person who made the contribution obtains its return within 60 days of the discovery of the contribution by the dealer
A dealer is only entitled to two automatic exemptions per 12-month period and may only execute one automatic exemption for each MFP, regardless of the time period.
Exercise
Answer true or false.
- 1. True or false: Dealers are required to submit quarterly statements to the MSRB that disclose all of the dealer’s political contributions.
- 2. True or false: Municipal securities business in the context of the “pay to play” rule (MSRB Rule G-37) includes selling municipal securities to customers in the secondary market.
- 3. True or false: The “pay to play” rule has two main components: a prohibition on engaging in municipal securities business after certain political contributions are made and a disclosure requirement.
- 4. True or false: The “pay to play” rule prohibits dealers, and their associated professionals, from condu