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Communications from the Institute do not constitute, and should not be considered a substitute for, legal advice.
[20370]
September 15, 2006
TO: 529 PLAN ADVISORY COMMITTEE No. 17-06
529 PLAN MEMBERS No. 18-06
RE: DRAFT ICI COMMENT LETTER ON MSRB PROPOSED AMENDMENTS TO
ADVERTISING RULE
As we previously informed you, the Municipal Securities Rulemaking Board recently issued for
comment proposed amendments to its advertising rule, Rule G-21.∗ The Institute has prepared a draft
comment letter, which is attached and briefly summarized below.
Comments on the proposed amendments are due to the MSRB by September 22nd. If you
have any comments on the attached draft letter, please contact Frances Stadler (202/326-5822 or
frances@ici.org) or Dorothy Donohue (202/218-3563 or ddonohue@ici.org) by the close of
business on Tuesday, September 19th.
The draft letter supports the proposed amendments. Specific comments are as follows:
Basic disclosures. The draft letter strongly supports the proposed amendments clarifying that
certain basic disclosures in Rule G-21 are not legends requiring the use of specific language in
advertisements and that, instead, the information must be “effectively conveyed.” The letter states that
this flexibility is particularly important in the context of time-limited broadcast advertisements.
Tax-related disclosures. The draft letter strongly supports the proposed amendments
clarifying that generalized statements regarding tax benefits require only a generalized statement that
those benefits may be conditioned on meeting certain requirements. The letter also supports a
proposed change to permit dealers to omit certain disclosure suggesting that investors consider whether
their home states offer state tax or other benefits only available for investors in the home state 529 plan,
in the case of advertisements that are distributed through means reasonably likely to result in the
advertisements only being received by residents of the home state.
∗ See Memorandum to 529 Plan Advisory Committee No. 15-06, 529 Plan Members No. 16-06 [20302], dated August 18,
2006.
2
Generic advertisements. The draft letter supports permitting the use of generic
advertisements. It recommends deleting the term “specific municipal fund security” from the generic
advertising provisions. The letter states that this change would clarify that, while a generic
advertisement cannot refer to a specific investment option or portfolio, the rule does not preclude
mentioning a 529 plan, including by its brand name.
Blind advertisements. The draft letter supports the blind advertisement concept. It
recommends modifying the rule to clarify that contact information provided in a blind advertisement
may include a website through which investors can place orders for municipal fund securities, provided
that before making an initial investment through that website, an investor is required to acknowledge
receipt of the official statement. The letter also recommends that the MSRB clarify that the rule does
not prohibit a blind advertisement from providing a reference to a phone number or website that
includes the name of a broker, dealer or municipal securities dealer.
Disclosure regarding changes in the tax law. In response to the MSRB’s specific request for
comment, the draft letter recommends elimination of disclosure of the possibility that beneficial tax
treatment of 529 plans may lapse. The letter states that the recent repeal of the sunset provisions of the
Economic Growth and Tax Relief Act of 2001 relating to 529 plans makes this disclosure no longer
relevant.
Frances M. Stadler
Deputy Senior Counsel
Attachment (in .pdf format)
Note: Not all recipients receive the attachment. To obtain a copy of the attachment, please visit our members website
(http://members.ici.org) and search for memo 20370, or call the ICI Library at (202) 326-8304 and request the attachment
for memo 20370.