September 14, 2011
Ronald W. Smith, Corporate Secretary
Municipal Securities Rulemaking Board
1900 Duke Street, Suite 600
Alexandria, VA22314
Re:
Comments Concerning MSRB Notice 2011-41
Request for Comment on Draft Amendments to MSRB Rule G-21 (on
Advertising) and Draft Interpretive Notice Concerning the Application of MRB
Rule G-17 (on Fair Dealing) to Certain Communications
Dear Mr. Smith:
The College Savings Plans Network (CSPN), on behalf of its members, is pleased to have this
opportunity to comment on MSRB Notice 2011-41 Request for Comment on Draft Amendments
to MSRB Rule G-21 (on Advertising) and Draft Interpretive Notice Concerning the Application
of MRB Rule G-17 (on Fair Dealing) to Certain Communications (the “Notice”).
As you know, CSPN submitted a comment letter to the Securities and Exchange Commission
(the “Commission”) in response to proposed rulemaking by the Commission regarding the
registration of municipal advisors (the “SEC Comment Letter”). 1 In that letter, CSPN expressed
its views on the Commission’s interpretation of the term “municipal advisors” to include
unelected board members of municipal issuers who provide “advice” to the governmental entity
they represent on, among other topics, the issuance of municipal securities and/or the investment
of governmental funds (with an exception for unelected board members who hold office ex
officio by virtue of holding an elective office.) For several reasons as more fully explained in
the SEC Comment Letter, CSPN was and remains strongly opposed to the definition of
“municipal advisors” to include any board member, elected or unelected, of state 529 college
savings plans (“529 Plans”).
In addition to the registration requirements imposed by Section 15B of the Securities Exchange
Act of 1934, the MSRB is proposing amendments to Rule G-21 and has issued a draft
interpretive notice concerning the application of Rule G-17. In the event that unelected board
1
See CSPN Letter to Ms. Elizabeth Murphy, Secretary, United States Securities and Exchange
Commission dated February 18, 2011 regarding SEC Release No. 34-63576, 76 FR 824 (January 6,
2011), which is incorporated to this letter by this reference.
members of 529 Plans are interpreted by the SEC to be considered “municipal advisors”, CSPN
strongly opposes the application of Rules G-21, G-9 and G-17 to such board members for the
following reasons.
First, the application of Rules G-21, G-9 and G-17 to 529 Plan board members appears to
interfere with state governance. Many, if not most, 529 Plan board members are appointed, rather
than elected, to their office. Their appointment is typically made by the state’s Governor or other
elected official or determined by state statute. State law or state officials determine the
appropriate qualifications for such board members. Qualifications may include past public
service or experience relevant to the administration of 529 Plans. However, board members do
not serve in the capacity of financial advisors to 529 Plans, leaving that role to the professionals
the amendments to Section 15B were designed to address. In addition, the board members are
generally uncompensated or nominally compensated and serve for a limited period. Finally,
such board members typically are subject to their state’s freedom of information and conflict of
interests laws. Requiring such board members to adhere to the MSRB’s advertising, records
retention and fair dealing standards, in addition to the registration requirements applicable to
“municipal advisors” will likely discourage a high percentage of capable and valuable potential
board members from serving on state entity 529 Plan boards. CSPN believes that the application
of Rules G-21, G-9 and G-17 to board members would diminish the pool of eligible state public
servants in order to provide state entities with perceived protections that are redundant with, or in
addition to, the state’s own determinations as to the necessary qualifications and regulation of its
public servants.
Second, the added compliance and recordkeeping obligations required by Rules G-21, G-9 and
G-17 would create an undue compliance burden for most, if not all 529 Plan board members.
The application of these rules may require board members to hire compliance professionals to
assist in advertising, recordkeeping and fair dealing duties and may inadvertently encompass
other business activities of such board members not directly related to their services for the
applicable 529 Plan.
CSPN appreciates the opportunity to provide these comments to you and would be pleased to
provide additional information or to have the opportunity to discuss 529 Plans with you more
fully in the future.
Sincerely,
Joan Marshall, Chair
College Savings Plans Network
2