Exceptions to the Rule
The rule carves out an exception for MFPs who live in a municipality and are entitled to vote for an official of the municipality. These individuals are allowed to contribute a de minimis amount, up to $250 per election. In contrast, MFPs who do not live in a municipality cannot give any amount if they or their firms wish to conduct municipal securities business with the municipality.
Example: A municipal securities dealer is located in a district that votes for an official of an issuer. The dealer makes a contribution of $200. Would this trigger the ban?
Yes. The de minimis exception only applies to MFPs. It does not apply to municipal securities dealers. Also, for the purposes of Rule G-37 municipal securities dealers do not include associated persons and, therefore, cannot be MFPs.
Example: While teaching at a community college, you contribute $300 to the political campaign of a local issuer. Six months later, you land a job with a broker-dealer as a researcher, pass the Series 7 exam, and become an MFP. Will your political contribution ban your new employer from doing a negotiated underwriting with that issuer?
Yes. It doesn’t matter where you were employed when you made your political contribution or whether you were an MFP at the time you made it. Your employer will be subject to the ban for the amount of the two-year period that remains from the time you made the contribution.
Example: While working as an MFP executive at one brokerage firm, you make a $150 contribution to an elected official of an issuer. You are a resident of the municipality. Three months later, you have changed employers and have the same responsibilities with another broker. You make another $150 contribution to the same official. Is your new employer subject to the two-year ban on doing municipal securities business with the issuer?
Yes. As an MFP you have contributed over $250 to the same issuer. Your new employer is on the hook for your to