The following is a reprint of a four-page letter sent by the Securities and Exchange Commission earlier this month to roughly 70 broker-dealers nationwide seeking detailed voluntary information on their political contributions.
The letter asks about contributions made by each firm and its officials to elected officials or employees of government agencies connected to municipal financings being handled by each firm.
The letter also seeks information on the procedures and "controls" the firms have in place for dealing with political contributions. Responses are due July 12.
June 4, 1993
Re: In the Matter of Certain Municipal Bond Offerings
Dear:
The staff of the Division of Enforcement of the Securities and Exchange Commission requests that [firm's name] voluntarily provide the Commission with certain information in connection with the above referenced inquiry. Specifically, we ask that [firm's name] provide certain information, detailed below, concerning political contributions, payments, or the providing of other things of value, by [firm's name] and its affiliated persons (1) to elected officials or employees of governmental entities in connection with the offering of municipal securities (2) by such entities. We are also requesting that [firm's name] provide certain information concerning the nature and extent of the controls and procedures in this area.
This request should not be construed as an adverse reflection upon any person, entity or security or as an indication by the Commission or its staff that any violation of law has occurred. The staff is requesting your voluntary cooperation, in part, because the information which you provide win assist in assessing the extent to which political contributions may affect the offer, sale and underwriting of municipal securities. Enclosed is a copy of Commission Form 1661 which contains important supplemental information.
We request that [firm's name] provide the following information:
1. Identify all municipal securities offerings (3) for which [firm's name] acted as the lead or the co-lead underwriter, during the time period from January 1, 1990, to the present.
2. Identify all municipal securities offerings for which [firm's name] served is the financial adviser, during the time period from January 1, 1990, to the present.
3. Identify all political or campaign contributions in the amount of $100 or greater made by or at the direction of [firm's name] or any of its affiliated persons, directly or indirectly, to any incumbent of, or candidate for, any public office or position in any state, any political subdivision of any state, any agency or instrumentality of any state or any political subdivision thereof, or any municipal corporate instrumentallty of one or more states hereinafter "Municipal Entity"), from January 1, 1990, to the present, where [firm's name] acted as lead or co-lead underwriter or financial adviser for a securities offering by such Municipal Entity during that time period.
4. For each contribution identified in response to number 3, above, state the amount of the contribution, and identify the person making the contribution, any person directing the contribution, the recipient of the contribution, and the relevant securities offering.
5. Identify all payments of money or anything of value in the amount of $1 00 or greater (other than those identified pursuant to paragraph 3 above) made by or at the direction of [firm's name] or any of its affiliated persons, directly or indirectly, to any incumbent of, or candidate for, any public office or position, whether elected or appointed, in any Municipal Entity, from January 1, 1990, to the present, where [firm's name] acted as lead or co-lead underwriter or financial adviser for a securities offering by such Municipal Entity during that time period.
6. For each payment identified in response to number 5, above, state the amount of the payment and identify the person making the payment, any persons directing the payment, the recipient of the payment, and he relevant securities offerings.
7. Identify all investments made, directly or indirectly, by or at the direction of [firm's name] or any of its affiliated persons in any enterprise or venture, in which any incumbent of, or candidate for, any public office or position, whether elected or appointed, in any Municipal Entity, possessed or received a direct or indirect interest, or in which such incumbent or candidate, or his agents or affiliates, directed such investments to be made, from January 1, 1990, to the present, where [firm's name] acted as lead or co-lead underwriter or financial adviser for a securities offering by such Municipal Entity during that time period.
8. For each investment identified in response to number 7, above, state the amount of the investment and identify the person making the investment, any person directing the investment, and the relevant securities offerings.
9. Identify all payments of money or anything of value made by or at the direction of [firm's name] or any of its affiliated persons, directly or indirectly, to any person or entity from January 1, 1990 to the present, for the purpose of influencing, or in connection with, the decision to select [firm's name] as a lead underwriter or financial adviser for any municipal securities offering.
10. For each payment identified in response to number 9, above, state the amount of the payment, and identify the person making the payment, any person directing the payment, the recipient of the payment, and the relevant municipal securities offering.
11. Describe [firm's name's] controls and supervisory procedures relating to contributions or payments by [firm's name], its affiliated persons, political action committees, directors, officers and employees to any incumbents of, or candidates for, any public office or position in any Municipal Entity. Include in your description the date when such controls and supervisory procedures were put in place, and identify any modifications [firm's name] has made to such controls and supervisory procedures, the time when such modifications were made, and reason(s) for such modification(s).
12. Identify any persons disciplined or terminated by [firm's name] after January 1, 1990 for conduct relating to contributions or payments, as defined above, and/or the solicitation of the under-writing business for any municipal securities offerings and the reasons that they were terminated. Please identify individuals who resigned as well as individuals who were actually terminated or disciplined. Also provide copies of the completed forms U-5 for any such individuals.
13. Identify all inquiries, reviews or investigations conducted by [firm's name] or on its behalf involving any conduct pertaining to (a) the solicitation of the underwriting of municipal securities; (b) the violation of any federal, state or local law pertaining to bribery and/or contributions; and (c) the violation of [firm's name's] controls and procedures referenced in request number 11, above. Also, please state the duration of any such investigation, including when it was commenced and when it was concluded.
We request that [firm's name] respond by July 12, 1993. The requested information may be sent to:
Julie K. Lutz Assistant Director Division of Enforcement U.S. Securities and Exchange Commission 50 Fifth Street, N.W. Mail Stop 4-7 Washington, D.C. 20549
If you should have any questions regarding this request, please contact either Bruce Hiler, Associate Director at (202) 272-2224 or Julie K. Lutz, Assistant Director at (202) 272-2333. Thank you for your cooperation.
Sincerely, William R. McLucas Director Division of Enforcement
1 For the purpose of this request, the terms "affiliated persons" means political action committees organized by [firm's name]; persons who, during the relevant time period, were executive officers, directors or partners of [firm's name]; and people employed by [firm's name] during the relevant time period in identifying, soliciting or obtaining municipal securities underwriting business or who otherwise were involved in [firm's name] municipal securities underwriting business.
2 As defined by section 3(a)(29) of the Securities Exchange Act of 193, 15 U.S.C. [subsection] 78c(a) (29).
3 For the purpose of this request, the term "offerings" includes only negotiated issues and excludes offerings where the lead or co-lead underwriting was selected on the basis of a competitive bid.
