Name Not Public

Exemptive relief is granted based on representations that:  the contribution pre-dated the contributor’s designation as an MFP; the MFP attempted to obtain a refund of the contribution; the Firm identified the contribution through its supervisory processes during its screening process when Name was being considered for a role that would cause her to be designated as an MFP; and the MFP will be prohibited from soliciting or otherwise being involved in municipal securities business with the City for at least two years from the date of the Contribution.

November 9, 2021

This is in response to your letter of October 22, 2021 (the “Letter”), requesting an exemption under Rule G-37(i) of the Municipal Securities Rulemaking Board (MSRB) and FINRA Rule 9610 from the prohibition in MSRB Rule G-37(b) from engaging in municipal securities business for Firm (the “Firm”) with the City (the “City”).

You have requested this exemption because on January 2, 2021, Name, an employee of the Firm, made a $10 contribution (the “Contribution”) to non-incumbent Candidate (“Candidate”) for the District representative on the City Council. At the time of the Contribution, Name resided in Borough and was not eligible to vote for Candidate. Candidate lost in the primary election.

Although employed by the Firm, Name did not meet the definition of municipal finance professional (“MFP”), as defined in MSRB Rule G-37(g)(ii), at the time of the Contribution. However, the Firm intends to designate Name as an MFP. Such designation would prohibit the Firm from engaging in municipal securities business, as defined in MSRB Rule G-37(g)(xii), with the City until January 2, 2023.

In support of your request that the Firm be granted an exemption from the G-37(b) prohibition, you have made the following representations:

• Name was not an MFP at the time she made the Contribution, nor was she seeking, or being considered for, a role at the Firm that would cause her to be designated as an MFP. Name joined the Firm in 2019 and worked in roles that did not necessitate designation as an MFP. Name first expressed an interest in interviewing for a role in the Firm’s Municipal Banking group in May 2021.
• The Contribution was not in any way related to municipal securities business. Rather, Name made the Contribution in order to provide support for a candidate that she believed would best serve the City.
• Name requested the return of the Contribution, but the venue through which the Contribution was made, Venue, declined to return the Contribution because the request was more than 90 days after the date of the Contribution.
• The Firm already had significant relationships with the City prior to the Contribution. The Firm has offices in the City and has served as an underwriter on numerous transactions with the City and its agencies. Furthermore, Candidate lost the primary election, and is not serving on the City Council.
• Neither the Firm, nor any associated person of the Firm, has engaged in any activity that would trigger a ban on municipal securities with the City pursuant to Rule G-37(b)(i).

Prior to the Contribution, the Firm had existing policies and procedures reasonably designed to ensure compliance with MSRB Rule G-37. The policies and procedures involve established processes for (i) reviewing proposed political contributions to candidates and incumbents in the U.S. with a state or local nexus, state and local political party committees, federal and state Political Action Committees, and ballot measures, (ii) questionnaires about prior political contributions before designating MFPs, (iii) periodic reminders and training about pre-clearing proposed political contributions, and (iv) regular and episodic reconciliations of approved political contributions with public records of political contributions. The Firm identified the Contribution during the time when Name was being considered for a role at the Firm that would cause her to be designated as an MFP.

FINRA has considered your request for exemptive relief pursuant to the applicable standards.¹ A paramount issue in rendering our determination is whether an exemption is consistent with the public interest, the protection of investors, and the purposes of MSRB Rule G-37. In reaching a determination, FINRA staff considered the following representations you made in light of several key factors surrounding the Contribution:

• Name was not an MFP at the time of the Contribution.
• At the time of the Contribution, neither Name nor the Firm anticipated a change in Name’s role that would result in an MFP designation.
• Name made a good faith effort to have the Contribution refunded.
• The Firm had significant business relationships with the City prior to the Contribution.
• The Contribution was unrelated to any municipal securities business.
• The Firm has procedures designed to ensure compliance with MSRB Rule G-37 and the Firm discovered the Contribution during its screening process when Name was being considered for a role that would cause her to be designated as an MFP.

In addition, you have represented that Name will be prohibited from soliciting or otherwise being involved in municipal securities business with the City for at least two years from the date of the Contribution.  To ensure that Name will not be involved in such municipal securities business, you represent that the Firm will institute the following measures:

• The Firm will notify in writing its current and future MFPs who are directly or indirectly engaged in the solicitation of municipal securities business that Name cannot engage in municipal securities business (or be included in internal conversations, meetings, and/or emails that pertain to municipal securities business) with the City until January 3, 2023.
• The Firm will obtain and retain a certification from those MFPs that they (i) received, understand, and will comply with the terms of the notice, and (ii) acknowledge that they may be subject to sanctions, including potential dismissal, in the event they fail to comply.
• The Firm will obtain and retain a quarterly certification from Name about compliance with the restriction on activities.
• Name, like other MFPs, will become subject to the Firm’s MSRB Rule G-37 compliance procedures.

In addition to the foregoing, you represent that the determination of incentive compensation for Name will not consider the Firm’s municipal securities business with the City for at least two years from the date of the Contribution.

Based on the facts and circumstances as represented in your Letter and our application of the standards for exemptive relief in MSRB Rule G-37, FINRA concludes that it is appropriate to grant an exemption from the prohibition from municipal securities business as defined by Rule G-37, subject to the Firm’s compliance with the terms identified above. This exemption is based on our understanding of the facts as you have represented them. Our determination in this matter could be different if the facts are not as represented, if material facts have not been disclosed, or if new information emerges.

Your request for relief asks that the Firm’s application for exemption, and FINRA’s decision on the application, be kept confidential in their entirety. To the extent feasible and permitted under law, FINRA grants that request. However, our determination to provide exemptive relief will be available, with identifying information redacted, on the FINRA website with other FINRA responses to requests for exemptive relief under MSRB Rule G-37. By publishing the FINRA responses in redacted form, FINRA is able to provide confidentiality while informing and educating firms, issuers, and investor communities of the factors that FINRA may consider in granting or denying exemptive relief under MSRB Rule G-37. If you have any questions regarding the issues discussed herein, please contact me at 202-728-8133.

Sincerely,

Cynthia M. Friedlander
Senior Director, Fixed Income Regulation
Office of General Counsel