UNITED STATES OF AMERICA
In the Matter of
FIFTH THIRD SECURITIES, INC.,
|ORDER UNDER SECTION 15B(a)(4) OF THE SECURITIES EXCHANGE ACT OF 1934 GRANTING AN EXEMPTION FROM THE PROHIBITION PROVISION OF MUNICIPAL SECURITIES RULEMAKING BOARD RULE G-37(b)|
Fifth Third Securities, Inc. ("Fifth Third Securities" or "the firm") has submitted a letter, dated May 29, 2002, for an exemption pursuant to Section 15B(a)(4) of the Securities Exchange Act of 1934 (the "Exchange Act") from the prohibition on engaging in municipal securities business under Municipal Securities Rulemaking Board ("MSRB") Rule G-37(b). Fifth Third Securities' request for an exemption was made in conjunction with the firm's offer to settle administrative proceedings instituted by the Commission on June 18, 2002. That day, pursuant to the firm's offer of settlement, the Commission issued an order requiring the firm to cease and desist from committing or causing any violation or future violation of Exchange Act Section 15B(c)(1) and MSRB Rule G-37, pay a civil penalty of $1 million, and comply with its undertaking to retain an independent consultant to conduct a review of, and to report and make recommendations as to, the firm's supervisory and compliance policies and procedures related to the types of conduct that gave rise to the proceedings.
Fifth Third Securities has requested an exemption from any prohibition on engaging in municipal securities business that could result from five political contributions made by an executive of a bank affiliated with the firm, who had previously solicited municipal securities business on behalf of the firm. The five contributions were made to incumbents or candidates for elective offices responsible for, or having the authority to appoint persons who were responsible for, the hiring of brokers, dealers, or municipal securities dealers for municipal securities business by certain units of state and local government in the State of Ohio (hereinafter "the Issuers"). The contributions were made between December 2000 and October 2001 (the "five contributions"). The five contributions, which ranged between $500 and $2,500, totaled $6,000. The five contributions have since been returned to the bank executive by the recipients.
Section 15B(a)(4) of the Exchange Act provides that the Commission, by rule or order, upon its own motion or upon application, may conditionally or unconditionally exempt any broker, dealer, or municipal securities dealer from any provision of Section 15B or the rules or regulations thereunder, if it finds that such exemption is consistent with the public interest, the protection of investors and the purposes of Section 15B. MSRB Rule G-37 was adopted pursuant to Section 15B of the Exchange Act.
The firm has represented to the Commission that it discovered that the five contributions had been made by the executive, immediately reported them to the Commission staff, and promptly took remedial actions, which included improving compliance procedures and getting the contributions back from the issuer officials. It further represents that the contributor did not solicit and has never solicited municipal securities business from the recipients of the five contributions and, at the time of the five contributions, was not engaged in activities or holding a position that would trigger a "municipal finance professional" designation.
In light of the firm's above representations, the firm's offer of settlement in the related administrative proceedings, and the Commission's findings in those proceedings, the Commission has determined that it is consistent with the public interest, the protection of investors, and the purposes of Section 15B of the Exchange Act to exempt Fifth Third Securities from MSRB Rule G-37(b)'s prohibition on municipal securities business resulting from the five contributions. The Commission's Order is conditioned upon the bank executive ceasing all activities that would trigger a "municipal finance professional" designation, and making no political contributions to officials of the Issuers until November 30, 2002, by which time the bank executive's status as a municipal finance professional will have expired under operation of Rule G-37.1
The Commission has considered Fifth Third Securities' exemption request solely in the context of the Commission's settlement of administrative proceedings against the firm. Unless made in connection with an offer to settle a Commission enforcement action, all requests for exemption from the prohibition on engaging in municipal securities business under MSRB Rule G-37 should continue to be directed to the registered securities association of which the broker, dealer or municipal securities dealer is a member, as set forth in MSRB Rule G-37(i).
Accordingly, IT IS ORDERED, pursuant to Section 15B(a)(4) of the Exchange Act that Fifth Third Securities shall be exempt from MSRB Rule G-37(b)'s prohibition on municipal securities business resulting from the five contributions, provided Fifth Third Securities complies with the above terms and conditions.
By the Commission.
Jonathan G. Katz
|1||This exemption is based in part on our understanding of the material facts as the firm has represented them. If the facts are not as represented, if material facts have not been disclosed, or if new material information emerges, the Commission may vacate this order.|
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