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Self-Regulatory Organizations; Municipal Securities Rulemaking Board (MSRB); Order Granting Approval of Proposed Rule Change Relating to In-firm Delivery of the Regulatory Element of the Continuing Education Requirement

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Information about this document as published in the Federal Register.

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This document has been published in the Federal Register. Use the PDF linked in the document sidebar for the official electronic format.

Start Preamble August 1, 2001.

On June 14, 2001, the Municipal Securities Rulemaking Board (“MSRB”) filed with the Securities and Exchange Commission (“Commission”), pursuant to Section 10(b)(1) of the Securities Exchange Act of 1934 (“Act”) [1] and Rule 19b-4 thereunder,[2] a proposed rule change to amended rules G-3, on professional qualifications, rule G-8, on books and records, G-9, on record retention, and G-27, on supervision. The proposed rule change will allow dealers to provide in-firm delivery of the Regulatory Element of the continuing education requirement.

The proposed rule change was published for comment in the Federal Register on June 28, 2001.[3] The Commission received no comments on the proposal. This order approves the proposal.

In its current form, Rule G-3(h)(i)(A)(1) requires that each registered person who is not exempt from the rule, completer the Regulatory Element on the occurrence of his or her second registration anniversary and every three years thereafter. The Regulatory Element is a three and one half hour computer-based training program previously only administered at the location of an outside vendor. On each occasion, the training must be completed within 120 days after the registered person's anniversary date. A registered person who has not completed the Regulatory Element within the prescribed time periods is deemed to be inactive until the Regulatory Element has been fulfilled, and may not conduct, or be compensated for, activities requiring a securities registration.

The MSRB proposed rule change integrates the in-firm delivery requirements as specified by the Securities Industry/Regulatory Council on Continuing Education (“Council”), an overseer of the continuing education program for the securities industry. The Council recommends and assists in developing specific content and questions for the Regulatory Element, and minimum core curricula for the Firm Element. The Council, working with representatives from the North American Securities Administrators Association, and with the knowledge of the Council's Securities and Exchange Commission liaisons, developed a model under which brokers, dealers and municipal securities dealers may deliver the Regulatory Element computer-based training on firm premises. The model requires that the broker, dealer or municipal securities dealer meet certain conditions for in-firm delivery relating to supervision, computer hardware and security of the training delivery environment.

The Commission believes the proposed rule change is consistent with the protection of investors and the public interest on account that it facilitates the ability of registered persons to satisfy their obligations to meet the Regulatory Element of the continuing education requirement. Additionally, the Commission believes that the proposed rule change will not impose any burden on competition, since it equally applies to all brokers, Start Printed Page 42245dealers and municipal securities dealers.

The Commission must approve a proposed MSRB rule change if the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that govern the MSRB.[4] The Commission finds that the proposed rule change meets this standard. In particular, the Commission finds that the proposed rule is consistent with the requirements of Section 15B(b)(2)(C) of the Act,[5] which requires, that the MSRB's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, settling, process information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national system, and, in general, to protect investors and the public interest.

It Is Therefore Ordered, pursuant to Section 19(b)(2) of the Act [6] , that the proposed rule change (File No. MSRB-2001-04) be, and it hereby is, approved.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority [7] .

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See Release No. 34-44464 (June 22, 2001), 66 FR 34499.

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4.  In approving this proposed rule change, the Commissioin notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

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5.  15 U.S.C. 78o-4(b)(2)(C).

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[FR Doc. 01-20084 Filed 8-8-01; 8:45 am]

BILLING CODE 8010-01-M