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Code · REGISTER · 2006-05-02 · Railroad Retirement Board (RRB) · Notices

Notices. Notice of Records Used in Computer Matching Programs; Notification to individuals who are beneficiaries under the Railroad Retirement Act

21,361 words·~97 min read·/register/2006/05/02/06-4122

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 6325-39-M RAILROAD RETIREMENT BOARD Computer Matching and Privacy Protection Act of 1988; Notice of RRB Records Used in Computer Matching AGENCY: Railroad Retirement Board (RRB). ACTION: Notice of Records Used in Computer Matching Programs; Notification to individuals who are beneficiaries under the Railroad Retirement Act. SUMMARY: As required by the Computer Matching and Privacy Protection Act of 1988, RRB is issuing public notice of its use and intent to use, in ongoing computer matching programs, civil service benefit and payment information obtained from the Office of Personnel Management (OPM).
The purpose of this notice is to advise individuals applying for or receiving benefits under the Railroad Retirement Act of the use made by RRB of this information obtained from OPM by means of a computer match. ADDRESSES: Interested parties may comment on this publication by writing to Ms. Beatrice Ezerski, Secretary to the Board, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092. FOR FURTHER INFORMATION CONTACT: Ms. Lynn Harvey, Privacy Act Officer, Railroad Retirement Board, 844 North Rush Street, Chicago, Illinois 60611-2092, telephone number
(312)751-4869. SUPPLEMENTARY INFORMATION: The Computer Matching and Privacy Protection Act of 1988, Public Law 100-503, requires a Federal agency participating in a computer matching program to publish a notice regarding the establishment of a matching program. *Name of Participating Agencies:* Office of Personnel Management and Railroad Retirement Board. *Purpose of the Match:* The purpose of the match is to enable the RRB to
(1)identify affected RRB annuitants who are in receipt of a Federal public pension benefit but who have not reported receipt of this benefit to the RRB and
(2)receive needed Federal public pension benefit information for affected RRB annuitants more timely and accurately. Previously the RRB relied on the affected annuitant to report adjustments in the amounts of such public pension benefits. *Authority for Conducting the Match:* Sections 3(a)(1), 4(a)(1) and 4(f)(1) of the Railroad Retirement Act require that the RRB reduce the Railroad Retirement benefits of certain beneficiaries entitled to Railroad Retirement employee and/or spouse/widow benefits who are also entitled to a government pension based on their own non-covered earnings. This reduction is referred to as Public Service Pension offset. Section 224 of the Social Security Act provides for the reduction of disability benefits when the disabled worker is also entitled to a public disability benefit (PDB). This reduction is referred to as PDB offset. A civil service disability benefit is considered a PDB. Section 224(h)(1) requires any Federal agency to provide RRB with information in its possession that RRB may require for the purposes of making a timely determination of the amount of reduction under section 224 of the Social Security Act. Pursuant to 5 U.S.C. 552a(b)(3) OPM has established routine uses to disclose the subject information to RRB. *Categories of Records and Individuals Covered:* The records to be used in the match and the roles of the matching participants are described as follows: OPM will provide RRB twice a year with a magnetic tape file extracted from its annuity and survivor master file of its Civil Service Retirement and Insurance Records. The Privacy Act System of Records designation is OPM/Central-1. The following information from this OPM Privacy Act System of Records will be transmitted to RRB for the approximately 2.5 million records in the system: Name, social security number, date of birth, civil service claim number, first potential month and year of eligibility for civil service benefits, first month, day, year of entitlement to civil service benefits, amount of gross civil service benefits, and effective date (month, day, year) of civil service amount, and where applicable, civil service disability indicator, civil service FICA covered month indicator, and civil service total service months. The RRB will match the Social Security number, name, and date of birth contained in the OPM file against the same fields in its Master Benefit Files. The Privacy Act System of Records designations for these files is: RRB-26, “Payment, Rate and Entitlement History File,” as amended in 63 FR 28420 May 22, 1998. For records that are matched, the RRB will extract the civil service payment information. *Inclusive Dates of the Matching Program:* The matching program will become effective 40 days after a copy of the agreement, as approved by the Data Integrity Board of each agency, is sent to Congress and the Office of Management and Budget, or 30 days after publication of this notice in the **Federal Register** , whichever date is later. The matching program will continue for 18 months after the effective date and may be extended for an additional 12 months, if the conditions specified in 5 U.S.C. 552a(o)(2)(D) have been met. The notice we are giving here is in addition to any individual notice. A copy of this notice has been or will be furnished to both Houses of Congress and the Office of Management and Budget. Dated: April 26, 2006. By authority of the Board. Beatrice Ezerski, Secretary to the Board. [FR Doc. E6-6594 Filed 5-1-06; 8:45 am] BILLING CODE 7905-01-P SECURITIES AND EXCHANGE COMMISSION Proposed Collection; Comment Request; Upon written request, copies available from: Securities and Exchange Commission, Office of Filings and Information Services, Washington, DC 20549. *Extension:* Rule 17Ac2-2; SEC File No. 270-298; OMB Control No. 3235-0337 Form TA-2; SEC File No. 270-298; OMB Control No. 3235-0337. Notice is hereby given that pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 *et seq.* ), the Securities and Exchange Commission (“Commission”) is soliciting comments on the collection of information summarized below. The Commission plans to submit this existing collection of information to the Office of Management and Budget for extension and approval. • Rule 17Ac2-2 and Form TA-2; OMB Control No. 3235-0337; SEC File No. 270-298 Rule 17Ac2-2 (17 CFR 240.17Ac2-2) and Form TA-2 (17 CFR 249b.102) under the Securities Exchange Act of 1934 (17 U.S.C. 78a *et seq.* ) require transfer agents to file an annual report of their business activities with the Commission. The amount of time needed to comply with the requirements of Rule 17Ac2-2 and Form TA-2 varies. From the total 786 registered transfer agents, approximately 197 registrants would be required to complete only Questions 1 through 4 and the signature section of amended Form TA-2, which the Commission estimates would take each registrant about 30 minutes, for a total burden of 99 hours (197 × .5 hours). Approximately 262 registrants would be required to answer Questions 1 through 5, 10, and 11 and the signature section, which the Commission estimates would take about 1 hour and 30 minutes, for a total of 393 hours (262 × 1.5 hours). The remaining registrants, approximately 327, would be required to complete the entire Form TA-2, which the Commission estimates would take about 6 hours, for a total of 1,962 hours (327 × 6 hours). We estimate that the total burden would be 2,454 hours (99 hours + 393 hours + 1,962 hours). We estimate that the total cost of reviewing and entering the information reported on the Forms TA-2 for respondents is $31.50 per hour. The Commission estimates that the total cost would be $77,301.00 annually ($31.50 × 2,454). Written comments are invited on:
(a)Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility;
(b)the accuracy of the agency's estimates of the burden of the proposed collection of information;
(c)ways to enhance the quality, utility, and clarity of the information to be collected; and
(d)ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Consideration will be given to comments and suggestions submitted in writing within 60 days of this publication. Comments should be directed to
(1)the Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, New Executive Office Building, Washington, DC 20503 or by sending an e-mail to: *David_Rostker@omb.eop.gov* ; and
(ii)R. Corey Booth, Director/Chief Information Officer, Securities and Exchange Commission, C/O Shirley Martinson, 6432 General Green Way, Alexandria, Virginia 22312 or send an e-mail to: *PRA_Mailbox@sec.gov* . Comments must be submitted to OMB within 60 days of this notice. Dated: April 20, 2006. Nancy M. Morris, Secretary. [FR Doc. E6-6554 Filed 5-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53715; File No. SR-MSRB-2006-03] Self-Regulatory Organizations; Municipal Securities Rulemaking Board; Notice of Filing of Proposed Rule Change Consisting of Interpretive Guidance on Customer Protection Obligations of Brokers, Dealers and Municipal Securities Dealers Relating to the Marketing of 529 College Savings Plans April 25, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”), 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on March 31, 2006, the Municipal Securities Rulemaking Board (“MSRB” or “Board”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by the MSRB. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The MSRB is filing with the Commission a proposed rule change consisting of interpretive guidance on customer protection obligations of brokers, dealers and municipal securities dealers (“dealers”) relating to the marketing of 529 college savings plans. The MSRB proposes an effective date for the proposed rule change of 60 calendar days after Commission approval. The text of the proposed rule change is available on the MSRB's Web site ( *http://www.msrb.org* ), at the MSRB's principal office, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the MSRB included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The MSRB has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose In a May 14, 2002 notice (the “2002 Notice”), the MSRB interpreted Rule G-17, on fair dealing, to require dealers selling out-of-state 529 college savings plan interests to customers to disclose at or prior to the sale to the customer (the “time of trade”) that, depending upon the laws of the customer's home state, favorable state tax treatment for investing in a 529 college savings plan may be limited to investments made in a 529 college savings plan offered by the customer's home state. 3 In addition, the MSRB provided guidance in the 2002 Notice on the application of Rule G-19, on suitability of recommendations and transactions, and other customer protection rules in the context of 529 college savings plan transactions. 3 *See* Rule G-21 Interpretation—Application of Fair Practice and Advertising Rules to Municipal Fund Securities, May 14, 2002, *reprinted* in MSRB Rule Book. The proposed rule change broadens the existing time-of-trade disclosure obligation with respect to the marketing of out-of-state 529 college savings plans. Under the proposed rule change, dealers selling out-of-state 529 college savings plan interests are required to disclose to the customer, at or prior to the time of trade, that:
(i)Depending on the laws of the home state of the customer or designated beneficiary, favorable state tax treatment or other benefits offered by such home state may be available only if the customer invests in the home state's 529 college savings plan;
(ii)state-based benefits should be one of many appropriately weighted factors to be considered in making an investment decision; and
(iii)the customer should consult with his or her financial, tax or other adviser about how such state-based benefits would apply to the customer's specific circumstances and may wish to contact his or her home state or any other 529 college savings plan to learn more about their features. Guidance is provided as to the manner of delivering this revised out-of-state disclosure to ensure that such information is noted by the customer, and dealers are reminded that all disclosures made to customers, regardless of whether they are made pursuant to a regulatory mandate, must not be false or misleading. The proposed rule change further reminds dealers that providing disclosures to customers does not relieve them of their suitability duties—including their obligation to consider the customer's financial status, tax status and investment objectives—arising in connection with recommended transactions. The proposed rule change describes certain basic suitability principles applicable to recommended transactions in 529 college savings plans, advising dealers to consider whether a recommendation is consistent with the customer's tax status and any federal or state tax-related investment objectives of the customer. The proposed rule change emphasizes that any dealer that recommends a transaction must undertake an active suitability process involving a meaningful analysis that takes into consideration information about the customer and the security. Dealers are further advised that suitability determinations should be based on the various appropriately weighted factors that are relevant in any particular set of facts and circumstances. Finally, the proposed rule change reaffirms existing guidance from the 2002 Notice on other customer protection obligations applicable to dealer sales practices in the 529 college savings plan market. 2. Statutory Basis The MSRB believes that the proposed rule change is consistent with Section 15B(b)(2)(C) of the Act, 4 which provides that the MSRB's rules shall: 4 15 U.S.C. 78o-4(b)(2)(C). 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, clearing, settling, processing information with respect to, and facilitating transactions in municipal securities, to remove impediments to and perfect the mechanism of a free and open market in municipal securities, and, in general, to protect investors and the public interest. The MSRB believes that the proposed rule change is consistent with the Act because it will further investor protection by strengthening and clarifying dealers' customer protection obligations relating to the marketing of 529 college savings plans, including but not limited to the duty to provide important disclosures to customers investing in out-of-state 529 college savings plans and to undertake active suitability analyses for recommended transactions based on appropriately weighted factors. B. Self-Regulatory Organization's Statement on Burden on Competition The MSRB does not believe that the proposed rule change will result in any burden on competition not necessary or appropriate in furtherance of the purposes of the Act since it would apply equally to all dealers. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others On June 10, 2004, the MSRB published for comment draft interpretive guidance relating to, among other things, the disclosure obligations of dealers selling out-of-state 529 college savings plans, strengthening the out-of-state disclosures originally mandated in the 2002 Notice (the “2004 Proposal”). 5 The MSRB received comments on the 2004 Proposal from eight commentators. 6 After reviewing these comments, considering the concerns of NASD and others regarding high levels of out-of-state sales and consulting with Commission staff, the MSRB published on May 19, 2005 a notice seeking further comment on a revised version of the draft interpretive guidance (the “2005 Proposal”). 7 The 2005 Proposal included a discussion of existing resources and challenges in connection with obtaining disclosure information in the 529 college savings plan marketplace and sought comment on the possible substantial expansion of the disclosure and suitability obligations described in the 2002 Notice. The MSRB received comments on the 2005 Proposal from 22 commentators. 8 5 *See* MSRB Notice 2004-16 (June 10, 2004). The 2004 Proposal, together with a related proposal (MSRB Notice 2004-17 (June 15, 2004)), represented a comprehensive initiative of the MSRB to strengthen a broad range of customer protection obligations set out in the 2002 Notice. Portions of the 2004 Proposal significantly strengthening 529 college savings plan advertising requirements have been adopted, with certain additional requirements and modifications, by the MSRB and approved by the Commission. *See* Exchange Act Release No. 51736 (May 24, 2005), 70 FR 31551 (June 1, 2005). *See also* Exchange Act Release No. 52289 (August 18, 2005), 70 FR 49699 (August 24, 2005). In addition, the strengthened customer protection obligations with respect to 529 college savings plan sales incentives proposed in the related June 15, 2004 proposal have been adopted by the MSRB and approved by the Commission. *See* Exchange Act Release No. 52555 (October 3, 2005), 70 FR 59106 (October 11, 2005). The current proposed rule change represents the final stage of the MSRB's 2004 customer protection initiative. 6 Letters from: Kenneth B. Roberts, Hawkins Delafield & Wood LLP (“Hawkins”), to Ernesto A. Lanza, Senior Associate General Counsel, MSRB, dated August 20, 2004; Mary L. Schapiro, Vice Chairman, NASD, and President, Regulatory Policy and Oversight, to Mr. Lanza, dated September 9, 2004; Tamara K. Salmon, Senior Associate Counsel, Investment Company Institute (“ICI”), to Mr. Lanza, dated September 10, 2004; David J. Pearlman, Chairman, College Savings Foundation (“CSF”), to Mr. Lanza, dated September 13, 2004; Elizabeth L. Bordowitz, General Counsel, Finance Authority of Maine (“FAME”), to Mr. Lanza, dated September 13, 2004; Diana F. Cantor, Chair, College Savings Plan Network (“CSPN”), and Executive Director, Virginia College Savings Plan, to Mr. Lanza, dated September 15, 2004; Elizabeth Varley and Michael D. Udoff, Co-Staff Advisers, Securities Industry Association (“SIA”) Ad Hoc 529 Plans Committee, to Mr. Lanza, dated September 15, 2004; and Raquel Alexander, PhD, Assistant Professor, and LeAnn Luna, PhD, Assistant Professor, University of North Carolina at Wilmington (“UNCW”), to Mr. Lanza, dated September 15, 2004. 7 *See* MSRB Notice 2005-28 (May 19, 2005). 8 Letters from: Ms. Alexander, Assistant Professor of Accounting, University of Kansas, and Ms. Luna, Assistant Professor of Accounting, University of Tennessee (“Alexander & Luna”), to Mr. Lanza, dated July 26, 2005; Judith A. Wilson, Compliance Attorney, 1st Global Capital Corp. (“1st Global”), to Mr. Lanza, dated July 28, 2005; Diana Scott, Senior Vice President & General Manager, John Hancock Financial Services (“Hancock”), to Mr. Lanza, dated July 28, 2005; John C. Heywood, Principal, Vanguard Group, Inc. (“Vanguard”), to Mr. Lanza, dated July 28, 2005; Mr. Pearlman, CSF, to Mr. Lanza, dated July 29, 2005 and February 13, 2006; Tim Berry, Chair, CSPN, and Indiana State Treasurer, to Mr. Lanza, dated July 29, 2005; Ms. Salmon, ICI, to Mr. Lanza, dated July 29, 2005; Jacqueline T. Williams, Executive Director, Ohio Tuition Trust Authority (“Ohio TTA”), to Mr. Lanza and Ghassan Hitti, Assistant General Counsel, MSRB, dated July 29, 2005; Ira D. Hammerman, Senior Vice President & General Counsel, SIA, to Mr. Lanza, dated July 29, 2005; Ms. Cantor, Executive Director, Virginia College Savings Plan (“Virginia CSP”), to Mr. Lanza, dated July 29, 2005; John D. Perdue, Chairman, Board of Trustees of the West Virginia College Prepaid Tuition and Savings Program, and State Treasurer (“West Virginia”), to Mr. Lanza, dated July 29, 2005; James F. Lynch, Associate Vice President for Finance, University of Alaska (“University of Alaska”), to Mr. Lanza, dated July 29, 2005; Eileen M. Smiley, Vice President & Assistant Secretary, USAA Investment Management Company (“USAA”), to Mr. Lanza, dated July 29, 2005; Ronald C. Long, Senior Vice President, Wachovia Securities, LLC (“Wachovia”), to Mr. Lanza, dated July 29, 2005; Michael L. Fitzgerald, State Treasurer of Iowa (“Iowa”), to Mr. Lanza, received August 1, 2005; Henry H. Hopkins, Vice President, Director & Chief Legal Counsel, T. Rowe Price Investment Services, Inc. (“T. Rowe”), to Mr. Lanza, dated August 1, 2005; Thomas M. Yacovino, Vice President, A.G. Edwards and Sons, Inc., (“AG Edwards”), to Mr. Lanza, dated August 3, 2005; W. Daniel Ebersole, Director, Georgia Office of Treasury and Fiscal Services (“Georgia”), to Mr. Lanza, dated August 4, 2005; Nancy K. Kopp, Treasurer, State of Maryland, and Chair, College Savings Plans of Maryland (“CSP-Maryland”), to Mr. Lanza, dated August 10, 2005; Mr. Pearlman, Senior Vice President and Deputy General Counsel, Fidelity Investments (“Fidelity”), to Mr. Lanza, dated December 7, 2005; James W. Pasman, Senior Vice President & Managing Director, PFPC Inc. (“PFPC”), to Mr. Lanza, dated December 12, 2005; and Randall Edwards, President, National Association of State Treasurers (“NAST”), and Oregon State Treasurer, to Amelia A.J. Bond, Chair, MSRB, dated March 20, 2006. The 2004 and 2005 Proposals, as well as the comments received on these proposals, are discussed below. The MSRB has considered these comments, together with important developments in the mechanisms for ensuring the free and effective flow of information to the public about all 529 college savings plans offered in the marketplace (discussed below), in determining to file this proposed rule change. *General.* The 2004 Proposal proposed expanding the existing obligation of dealers under the 2002 Notice to advise their out-of-state 529 college savings plan customers of the potential loss of in-state benefits. The 2004 Proposal did not address issues relating to suitability. All commentators on the 2004 Proposal supported the importance of ensuring some degree of disclosure to customers of the existence of potential in-state benefits of 529 college savings plans but some commentators suggested changes to the specific proposal. The 2005 Proposal covered a wider range of topics than the portion of the 2004 Proposal relating to disclosure. The 2005 Proposal sought to expand the time-of-trade disclosure obligation for out-of-state sales proposed in the 2004 Proposal to include a requirement that dealers identify for their out-of-state customers the specific tax and other benefits that each of their respective home states offer and that such customers would forego by investing in an out-of-state 529 college savings plan (the “special home state disclosure proposal”). More broadly, the 2005 Proposal discussed general disclosure practices and mechanisms in the 529 college savings plan market, including the possible establishment of centralized information sources. Dealers were reminded that disclosures made to customers do not relieve dealers of their suitability duties—including their obligation to consider the customer's financial status, tax status and investment objectives—arising in connection with recommended transactions. The 2005 Proposal discussed existing suitability standards as applied to recommendations of 529 college savings plan transactions and proposed expanding such standards to require dealers recommending out-of-state 529 college savings plan investments to undertake a comparative suitability analysis involving a comparison of the recommended out-of-state 529 college savings plan with the customer's home state 529 college savings plan (the “comparative suitability proposal”). Finally, the 2005 Proposal discussed other sales practice obligations under the MSRB's fair practice rule. 9 Although some commentators supported the concept of centralized information sources for the 529 college savings plan market and the clarification of certain elements of existing basic disclosure and suitability obligations, the vast majority of commentators opposed any requirements to disclose specific in-state features foregone as a result of an out-of-state investment or to undertake a comparative suitability analysis. 9 These provisions did not generate comments and have been included in the proposed rule change with only minimal modifications. The MSRB has determined to strengthen the existing time-of-trade disclosure and basic suitability obligations as applied to transactions in 529 college savings plans. However, in view of significant developments toward the maturation of the disclosure dissemination system for this market and with due regard to concerns expressed by the commentators and in press reports regarding the potentially substantial impact of the special home state disclosure and comparative suitability proposals, the MSRB has determined at this time not to adopt these two proposals pending further assessment of the efficacy of developments in the disclosure infrastructure. Disclosure. General Time-of-Trade Disclosure Obligation and Established Industry Sources *Summary.* The 2005 Proposal described dealers' obligations to make time-of-trade disclosures of all material facts about a 529 college savings plan investment they are selling to their customers that are known to the dealer or that are reasonably accessible from established industry sources. 10 The 2005 Proposal included a discussion of established industry sources for 529 college savings plan information 11 and requested comments on whether one or more centralized Web-based sources of information should be established by the private sector, industry associations or the MSRB. The 2005 Proposal noted that such a resource would ideally provide on-site summary information formatted to allow dealers and customers to make meaningful comparisons of the material features of 529 college savings plans, together with direct links to all 529 college savings plan official statements (typically referred to as “program disclosure documents”) and related information. The types of material features summarized on such a site might include (among other things) state tax treatment, other state-based benefits, costs associated with investments and performance information. The 2005 Proposal suggested that such a centralized Web site could embed within its posted summary information direct hyperlinks to the portions of the program disclosure document or other 529 college savings plan materials that provide more detailed descriptions of the summarized information. 12 The 2004 Proposal did not address these issues. 10 Established industry sources include the system of nationally recognized municipal securities information repositories, the MSRB's Municipal Securities Information Library® system and Real-Time Transaction Reporting System, rating agency reports and other sources of information relating to the municipal securities transaction generally used by dealers that effect transactions in the type of municipal securities at issue. *See* Rule G-17 Interpretation—Interpretive Notice Regarding Rule G-17, on Disclosure of Material Facts, March 20, 2002, published in *MSRB Rule Book* . 11 The MSRB noted that many of the traditional established industry sources are designed specifically for debt securities, not 529 college savings plans, and that it viewed established industry sources for 529 college savings plans as encompassing a broad variety of information sources that professionals in this market can and do use to obtain material information about these investments and the state programs. 12 The 2005 Proposal noted that the centralized Web site could, for example, provide hyperlinks to Web sites, or other contact information for sources, providing performance data current to the most recent month-end, as required under Rule G-21(e)(ii)(C) relating to 529 college savings plan advertisements containing performance information. *Comments.* Two commentators on the 2005 Proposal supported the establishment of a centralized Web site for summary 529 college savings plan information with links to 529 college savings plan materials for more detailed information. 13 They stated that such a Web site would allow dealers and customers to make meaningful comparisons of features and reduce the complexity of gathering accurate, complete and timely information. Alexander & Luna listed what they viewed as several weaknesses of current third-party Web sites:
(i)Information that is frequently out-of-date, incomplete or inaccurate;
(ii)comparison information that is not universally available;
(iii)information that is “summarized at a very high level;”
(iv)Web site tools that are often over-simplified, which can distort results and ultimately provide incorrect guidance; and
(v)many current Web sites that require users to pay for subscriptions in order to obtain basic information. 13 1st Global; Alexander & Luna. Many commentators opposed, or questioned the feasibility of, establishing a centralized Web site. 14 Some commentators expressed concern that disparate features of 529 college savings plans make presentation of parallel information nearly impossible and that information presented in a summary manner may omit material information or portray such information inaccurately. 15 Some commentators expressed concerns about potential liabilities for dealers that might rely on summarized information obtained from any such centralized Web site. 16 Hancock stated that existing Web sites are adequate for the marketplace. 14 AG Edwards, CSF, CSPN (with the concurrence of CSP-Maryland, Georgia, Iowa, Ohio TTA, University of Alaska, Virginia CSP, West Virginia), Hancock, and USAA. 15 CSF, CSPN, Hancock. 16 Hancock, Vanguard. CSPN stated that the creation of an MSRB-sponsored Web site would be contrary to the municipal securities exemption under federal securities laws and that it is already working to address 529 college savings plan disclosure concerns through its disclosure principles and its own Web site. CSPN noted that it had recently developed Disclosure Principles Statement No. 2 (“DP-2”) which, “along with the information available on the CSPN Web site will be the most effective and appropriate approach to enhancing investor accessibility to pertinent 529 Plan information.” 17 CSPN stated that DP-2 included “an expanded locator concept, which will assist investors in finding similar information in the offering materials prepared by various State issuers, while still using only the materials authorized by that State issuer.” 18 17 DP-2 updated CSPN's Voluntary Disclosure Principles Statement No. 1 (“DP-1”), which CSPN published in 2004 to provide guidance to state programs in preparing their program disclosure documents. *See also* NAST. 18 CSP-Maryland, Georgia, Iowa, Ohio TTA, University of Alaska, Virginia CSP and West Virginia supported CSPN's position. Although the 2004 Proposal did not address broader disclosure issues in the 529 college savings plan market, two commentators on the 2004 Proposal made suggestions in this regard, stating that the MSRB should put in place a broader set of disclosure requirements to accompany the proposed disclosures described in the draft guidance. 19 NASD suggested that the MSRB require standardized point-of-sale disclosure of fees and compensation in a manner similar to the point-of-sale disclosure requirements included by the Commission in its proposed Exchange Act Rule 15c2-3. 20 UNCW described an academic study on factors influencing investor choices of 529 college savings plans and concluded that “investors appear to be choosing high fee/broker sold funds rather than the lower fee, direct investment options * * * [and] appear to be ignoring state tax benefits.” Stating that its study suggested that investors may not have sufficient information in these areas, UNCW supported mandating disclosure of not only state tax benefits but also uniform disclosure of fees and performance for each 529 college savings plan portfolio and for each underlying fund in such portfolio, as well as the percentage of total investments that each underlying fund represents with respect to such 529 college savings plan portfolio. 19 NASD and UNCW. 20 *See* Securities Act Release No. 8358 (January 29, 2004), 69 FR 6438 (February 10, 2004). *See also* Securities Act Release No. 8544 (February 28, 2005), 70 FR 10521 (March 4, 2005). The proposed rulemaking by the Commission would apply to dealer sales of 529 college savings plan interests, in addition to sales of mutual funds and variable annuities. The MSRB observes that NASD has provided comments to the Commission on this proposal that are similar to those provided to the MSRB. The MSRB also has provided comments to the Commission in support of its point-of-sale disclosure proposal (available at *www.sec.gov/rules/proposed/s70604/s70604-629.pdf* ). The MSRB has taken NASD's suggestions in this regard under advisement pending final action by the Commission on proposed Rule 15c2-3. *MSRB Response.* Since publishing the 2005 Proposal, the MSRB has engaged the 529 college savings plan industry and other federal securities regulators in a dialogue regarding the 2005 Proposal. In particular, the MSRB has emphasized that a crucial factor underlying the special home state disclosure and comparative suitability proposals for out-of-state sales was the difficulty that the average investor faces in obtaining and understanding the key items of information relevant in making an informed investment decision in the context of the varied and complex national 529 college savings plan marketplace. 21 21 Investor confusion has often been reported to result from the large number of states offering valuable state tax or other benefits for investing in-state and the fact that virtually every plan has unique and sometimes complicated features not included in most other plans. The difficulties that investors face finding and understanding relevant information (in spite of the existence of a handful of Web-based resources on 529 college savings plans), as well as some recent steps toward improving the ability of investors to understand their choices in the marketplace, have been detailed by the press. *See, e.g.* , Ross Kerber, “Complaints Mounting over College Savings Accounts,” Boston Globe, February 14, 2006, at *www.boston.com/business/personalfinance/articles/2006/02/14/complaints_mounting_over_college_savings_accounts;* John Wasik, “How to Find the Best 529 College Savings Programs,” Bloomberg.com, February 13, 2006, at *http://www.bloomberg.com/apps/news?pid=10000039&sid=aUh68emzUVEE&refer=columnist_wasik;* Albert B. Crenshaw, “529 College Savings Plans and State of Confusion,” Washington Post, February 12, 2006, at F8; Aleksandra Todorova, “529 Plans Get Report Card,” SmartMoney.com, February 10, 2006, at *www.smartmoney.com/consumer/index.cfm?story=200602101;* Jonathan Clements, “Choosing a 529 College-Savings Plan: When It Makes Sense to Go Out of State,” Wall Street Journal, January 4, 2006, at D1; Michelle Singletary, “Get the Straight Facts on Section 529,” Washington Post, December 1, 2005, at D2; Ashlea Ebling, “College Savers Unite!” Forbes.com, September 28, 2005, at *www.forbes.com/estateplanning/2005/09/27/beltway-college-savings-cz_ae_0928beltway.html.* The MSRB has long been an advocate for the best possible disclosure practices by the 529 college savings plan community, having previously noted that investor protection concerns dictate that disclosure in this market should be based on six basic characteristics: comprehensiveness, understandability, comparability, universality, timeliness and accessibility. 22 However, the MSRB has no authority to mandate that 529 college savings plans make specific disclosures, including disclosure of costs associated with investments in the plans, descriptions of the state tax consequences of investing in their plans or in out-of-state plans, or disclosure of performance under uniform standards. 23 22 *See* Oversight Hearing on 529 College Savings Plans, Hearing Before the Subcomm. on Financial Management, The Budget, and International Security of the Senate Comm. on Governmental Affairs, 108th Cong. (Sept. 30, 2004) (testimony of Ernesto A. Lanza, Senior Associate General Counsel, MSRB). 23 When dealers market 529 college savings plans, the MSRB requires time-of-trade disclosures of material information to customers, including but not limited to disclosure of the possible loss of state tax benefits if investing out-of-state. Proposed Exchange Act Rule 15c2-3, if adopted, would mandate that point-of-sale fee disclosures be made by dealers in a uniform manner. Furthermore, the MSRB has adopted uniform requirements for the calculation and presentation of up-to-date performance data in 529 college savings plan advertisements published by dealers that also require that advertisements disclose the possible loss of state tax benefits if investing out-of-state. The MSRB is of the view that a more comprehensive and user-friendly system of established industry sources is needed in the 529 college savings plan market. Such a system would be based on centralized Web sites providing direct access to official issuer disclosure materials for the entire universe of 529 college savings plan offerings, together with understandable educational information and tools allowing for side-by-side comparisons of different 529 college savings plans. It is crucial for ensuring that dealers and other investment professionals seeking to provide advice to their customers on their college savings options are able to do so with a full view of the available alternatives. In addition, this maturation of the disclosure dissemination system for the 529 college savings plan market would be particularly crucial to allowing customers to have direct access to the types of information and other resources they need to make informed investment decisions, thereby promoting investor confidence in their own abilities to make such informed choices, whether with the advice of an investment professional or as a self-directed investor. The MSRB understands that CSPN has undertaken to upgrade its existing Web site to provide a comprehensive centralized Web-based utility for the 529 college savings plan market. 24 This CSPN utility is expected to provide a combination of on-site and hyperlinked resources, including summary information formatted to allow meaningful comparisons of many of the material features of different 529 college savings plans, together with direct links to all 529 college savings plan program disclosure documents and related information as well as to other sources providing tools designed for analyzing potential 529 college savings plan investments. The MSRB understands that the types of material features to be disclosed through this utility include, but are not limited to, state tax treatment and other state-based benefits, costs associated with investments, types of underlying investments, performance information and other important features that can vary considerably from state to state, with hyperlinks embedded within such summary information providing direct links to a full description of such specific feature in the issuer's official program disclosure document or other reliable sources. CSPN has also recently published its DP-2, which updates its baseline disclosure standards designed to assist the states in improving the quality and comparability of their 529 college savings plan disclosures in the program disclosure document. In the 2005 Proposal, the MSRB had urged CSPN and the individual 529 college savings plans to strive for the maximum possible ease of access to, and uniformity of content in, the program disclosure documents consistent with providing information that is complete, understandable and not misleading. The MSRB views the upcoming implementation of the CSPN Web site disclosure utility and the development and universal adoption of DP-2 as significant steps toward achieving the goals the MSRB had set out for the 529 college savings plan market. 24 NAST. CSPN is an affiliate of NAST. The CSPN utility will join other commercial, industry group and regulator Web-based resources providing useful information for individuals seeking to save for college expenses and for investment professionals active in the 529 college savings plan market. Several commercial ventures already provide, in summary and often tabular form, some categories of information for all available 529 college savings plans. Such information can include fees and expenses, minimum and maximum investments, nature of the underlying investments, distribution channels, and state tax treatment, as well as proprietary ratings based on varying criteria. Much of this information is available at no cost, with some sources making available, for a fee, premium or membership-based services for professionals that provide greater detail or more comprehensive analyses of the available information. Many of these commercial Web sites have taken recent steps to augment and refine the information they offer to the public, and the MSRB understands that alternative pricing structures suitable for retail investors for access to these premium services are being considered. In addition, the MSRB, the Commission, NASD and the North American Securities Administrators Association (“NASAA”) all provide general information about investing in 529 college savings plans useful to individual investors and market participants. 25 NASD plans to introduce on its Web site in the near future an improved expense analyzer for the 529 college savings plan market using a live datafeed that should allow for more reliable calculations and cost comparisons among different 529 college savings plans. The CSPN utility is expected to serve as a central hub through which investors can easily access many of these other Web-based resources. 25 The MSRB provides information for investors in 529 college savings plans at *www.msrb.org/msrb1/mfs/ruleinfo.asp.* The Commission also has published an investor-oriented introduction to 529 college savings plans at *www.sec.gov/investor/pubs/intro529.htm.* NASD has created a college savings center for investors at *http://apps.nasd.com/investor_Information/Smart/529/000100.asp.* NASAA, an association of state securities regulators, has published (in conjunction with CSPN and ICI) a brochure on understanding college savings plans, available at *www.nasaa.org/Investor_Education/3136.cfm.* The MSRB believes that improved disclosures can only be effective if potential investors actually access such disclosures with sufficient time to make use of the information in coming to an investment decision. The MSRB urges dealers and other participants in the 529 college savings plan market to provide the investing public with easy access to, and to affirmatively encourage the use of, this market-wide information. The MSRB will monitor the 529 college savings plan market closely with respect to the concerns it sought to address through the 2005 Proposal. The MSRB will be acutely sensitive to, and will consider whether further rulemaking would be appropriate in the event of, any significant failures in the further development of the disclosure dissemination system or in the efficacy of this dissemination system to address the MSRB's stated investor protection concerns. Time-of-Trade Disclosure Obligation in Connection With Out-of-State Sales. *Summary.* Currently, a dealer's time-of-trade disclosure obligation under Rule G-17 requires the dealer, when selling an out-of-state 529 college savings plan interest to a customer, to disclose that, depending upon the laws of the customer's home state, favorable state tax treatment for investing in a 529 college savings plan may be limited to investments made in a 529 college savings plan offered by the customer's home state. 26 The 2004 Proposal sought to broaden this time-of-trade disclosure obligation to include reference to other potential benefits (such as scholarships to in-state colleges, matching grants into 529 college savings plan accounts, or reduced or waived program fees, among other benefits), in addition to state tax benefits, offered solely in connection with in-state investments. 27 26 The 2002 Notice also stated that such disclosure, coupled with a suggestion that the customer consult a tax adviser about any state tax consequences of the investment, would provide adequate notice of the potential loss of in-state tax benefits. 27 The 2004 Proposal would require the dealer to suggest that the customer consult with a qualified adviser or contact his or her home state's 529 college savings plan to learn more about any state tax or other benefits that might be available in conjunction with an investment in that state's 529 college savings plan. The 2005 Proposal retained the baseline time-of-trade disclosure proposed in the 2004 Proposal, with a modification to include reference to the designated beneficiary's home state in addition to that of the customer. The 2005 Proposal also would add to the baseline time-of-trade disclosure a requirement that the dealer advise the customer that any state-based benefits offered with respect to a particular 529 college savings plan should be considered as one of many appropriately weighted factors that should be considered by the customer in making his or her investment decision. The dealer also would be required to suggest that the customer consult with his or her financial, tax or other adviser to learn more about how such home state features (including any limitations) may apply to the customer's specific circumstances, and that the customer also may wish to contact his or her home state or any other 529 college savings plan to learn more about any state-based benefits (and any limitations thereto) that might be available in conjunction with an investment in that state's 529 college savings plan. In a significant expansion from the 2004 Proposal, the 2005 Proposal sought to impose the special home state disclosure proposal in addition to the baseline time-of-trade disclosure described above. Under this special home state disclosure proposal, a dealer would be required to inquire of any out-of-state customer as to whether the realization of state-based benefits was an important factor in the customer's investment decision. If the customer were to answer affirmatively, the dealer would be required to disclose
(i)material information available from established industry sources about state-based benefits offered by the home state of the customer or designated beneficiary for investing in its 529 college savings plan and
(ii)whether such state-based benefits are available in the case of an investment in an out-of-state 529 college savings plan. Finally, the 2005 Proposal reminded dealers that the time-of-trade disclosure obligation with respect to sales of out-of-state 529 college savings plan interests is in addition to dealers' existing general obligation under Rule G-17 to disclose to their customers at the time of trade all material facts known by dealers about the 529 college savings plan interests they are selling to the customers, as well as material facts about such 529 college savings plan that are reasonably accessible to the market through established industry sources. Further, the 2005 Proposal reminded dealers that disclosures made to customers as required under MSRB rules do not relieve dealers of their suitability obligations—including the obligation to consider the customer's financial status, tax status and investment objectives—if they have recommended investments in 529 college savings plans. *Comments.* All commentators on the 2004 Proposal supported the importance of ensuring disclosure to customers of the potential existence of state-specific features of 529 college savings plans, with many providing suggested modifications. CSF expressed concern about the potential for over-emphasizing state variations in a way that may detract from more fundamental considerations in making an investment decision. Two commentators stated that not every difference in state treatment ultimately will be a benefit to the investor, particularly in view of potential recapture of state tax benefits or other restrictions that some states impose under certain circumstances. 28 These commentators suggested that the best course would be to remind investors to carefully review the program disclosure documents of their home state programs and to consult their own advisors before investing, with one commentator stating that it would be inappropriate to suggest to investors that they seek help from their home state programs because it is unclear whether the programs can provide complete information regarding such consequences and because some states may seek to persuade investors to make an investment in their program rather than to impart disinterested information. 29 Two other commentators stated that the proposed disclosure should reflect that some benefits may be dependent on the designated beneficiary's home state (rather than or in addition to the home state of the investor). 30 28 CSF and SIA. 29 CSF. However, Hawkins disagreed, stating that with respect to non-tax state benefits, customers should be directed to the specific state program for more information. 30 CSPN and FAME. Most commentators on the 2005 Proposal accepted the modified baseline time-of-trade disclosure. However, most commentators strongly opposed the newly proposed special home state disclosure proposal requiring disclosure of specific in-state features that an out-of-state investor may forego, 31 with no commentator expressing support for this proposal. Several commentators argued that the specific disclosures under the special home state disclosure proposal would inevitably result in state-based benefits being given disproportionate weight as compared to the many other important factors to be considered in making an investment decision. 32 In addition, commentators observed that, without a reliable source of market-wide information, dealers would be required to undertake substantial effort (with concomitant expenditure of resources) to understand and track the details of constantly changing state law treatment of all 529 college savings plans. 33 Two commentators warned that requiring dealers to make specific disclosures about 529 college savings plans they do not offer could result in potential liability. 34 SIA stated that the special home state disclosure proposal would have the counter-intuitive result of compromising a dealer's ability to develop in-depth expertise regarding the range of investment products it is reasonably capable of servicing. Wachovia expressed concern that this requirement would have the potential to paralyze investors with an overabundance of information. 31 AG Edwards, CSF, CSP-Maryland, CSPN, Georgia, ICI, Iowa, Ohio TTA, SIA, T. Rowe, University of Alaska, USAA, Vanguard, Virginia CSP, Wachovia and West Virginia. 32 AG Edwards, CSF, ICI and Vanguard. 33 Hancock, ICI, SIA, T. Rowe, USAA, Vanguard and Wachovia. 34 Hancock and ICI. The University of Alaska stated that it did not wish to have its program features explained by dealers who are not authorized to market its 529 college savings plan, with other commentators echoing the concern that dealers would often be required to disclose information about a security they do not offer and about which they may not have sufficient expertise. 35 CSF observed that the burden this requirement would place on the 529 college savings plan market does not exist for any other type of security. Two commentators suggested that the MSRB await final action by the Commission on its point-of-sale disclosure proposal before finalizing any significant changes in 529 college savings plan disclosure requirements. 36 35 ICI and Vanguard. 36 USAA and Wachovia. *MSRB Response.* The MSRB continues to believe that it is important that investors are informed that they may be foregoing state tax and other benefits offered by their home states by investing in out-of-state 529 college savings plans. At the same time, the MSRB agrees that there is a potential for over-emphasizing the importance of a particular state's beneficial state tax treatment of an investment in its 529 college savings plan, such as where a state offers a tax benefit that ultimately is relatively small in value compared to the financial impact that a marginally higher expense figure may have or under a variety of other circumstances. As a result, the MSRB has adopted the revised out-of-state disclosure obligation, which retains the baseline time-of-trade disclosure as modified in the 2005 Proposal. The MSRB believes that this time-of-trade disclosure in connection with out-of-state sales of 529 college savings plans, as embodied in the revised out-of-state disclosure obligation, achieves the appropriate balance between providing for the disclosure to customers of material information about the potential loss of state tax or other benefits relevant to their investment decision in 529 college savings plans without imposing a significant burden on dealers and other 529 college savings plan market participants that could possibly result in an over-simplification of the complexity of state law factors or an over-emphasis of state law factors as compared to other relevant investment factors. The MSRB has also retained the reminders in the 2005 Proposal to the effect that these disclosures do not obviate other disclosure requirements or suitability obligations arising as a result of a recommendation. The MSRB has determined not to retain the proposal to expand the time-of-trade disclosure obligation to include disclosures of specific state tax and other state-based features of the investor's home state as set out in the special home state disclosure proposal. The MSRB has based this determination in large measure on the potential adverse impact of this proposal and the significant steps currently in process toward improvements in the 529 college savings plan disclosure system. Fulfilling the Revised Out-of-State Disclosure Obligation Through the Program Disclosure Document. *Summary.* The 2004 Proposal would have clarified that dealers could meet their baseline time-of-trade disclosure obligation with respect to potentially foregone in-state benefits through the issuer's program disclosure document so long as the program disclosure document is provided to the customer at or prior to the time of trade. The 2004 Proposal also would have strengthened the minimum standards for prominence in the program disclosure document in order to meet the baseline time-of-trade disclosure obligation. Thus, to meet this obligation through the program disclosure document, the disclosure must appear in a manner that is reasonably likely to be noted by an investor. A presentation of this disclosure in the program disclosure document in close proximity and with equal prominence to the first presentation of information regarding other federal or state tax-related consequences of investing in the 529 college savings plan, and in close proximity and with equal prominence to each other presentation of information regarding state tax-related consequences of investing in the 529 college savings plan, would be deemed to satisfy this requirement. The 2005 Proposal modified this presentation standard to provide for equal prominence with the principal (rather than first) presentation of substantive information regarding other federal or state tax-related consequences of investing in the 529 plan, and the inclusion of a reference to this disclosure (rather than restating such disclosure in full) in close proximity and with equal prominence to each other presentation of information regarding state tax-related consequences of investing in the 529 plan. Neither proposal required that such disclosure be made through the program disclosure document, noting that the MSRB does not have the authority to mandate the inclusion of any particular item of information in the issuer's disclosure document. Both proposals provided that dealers would be required to separately make such disclosure if the program disclosure document did not include the information in the manner prescribed. *Comments.* Two commentators expressed concern that the 2004 Proposal would effectively establish requirements for what information must be included in the program disclosure document. 37 They noted that the MSRB does not have authority to directly impose such requirements. CSF stated that the MSRB should not establish specific requirements for how such disclosure should appear in the program disclosure document, while two other commentators suggested limiting some of the presentation requirements described in the 2004 Proposal. 38 SIA stated that the requirement that the information appearing in the program disclosure document must appear in a manner “reasonably likely to be noted by an investor” would place dealers in the position to question the judgment of the state issuers and suggested that there should be a presumption that the placement and adequacy of the disclosure in the program disclosure document is reasonable. 37 CSPN and FAME. These commentators, as well as Hawkins, noted that CSPN's DP-1 already contained language on this topic. 38 Hawkins and ICI. CSPN also expressed concern with respect to the reformulation of this language in the 2005 Proposal, stating that dealers would have to determine whether the issuer has satisfactorily made such disclosures, potentially calling into question the issuer's determination to include or omit particular information. 39 CSPN stated that this would create a constant second-guessing aspect as to the validity of offering materials created and distributed by state issuers. SIA stated that this provision would likely lead dealers to create their own disclosure documents for use in marketing 529 college savings plans, conflicting with most distribution agreements and program disclosure documents. 39 CSP-Maryland, Georgia, Iowa, Ohio TTA, University of Alaska, Virginia CSP and West Virginia supported CSPN's position. *MSRB Response* . The MSRB reaffirms its view that it has no authority to mandate the inclusion of any particular items in the issuer's program disclosure document. As noted in both the 2004 and 2005 Proposals, disclosure through the program disclosure document in the manner described by the MSRB is not the sole manner in which a dealer may fulfill the revised out-of-state disclosure obligation. Just as a dealer could meet this disclosure obligation through a separate communication, it stands to reason that a disclosure made through the program disclosure document in a manner that is reasonably likely to be noted by an investor could also be used by a dealer to fulfill this duty. Thus, the MSRB has provided in the proposed rule change that, if the issuer has not included the information in the program disclosure document in the manner described, inclusion in the program disclosure document in another manner may nonetheless fulfill the dealer's out-of-state disclosure obligation so long as disclosure in such other manner is reasonably likely to be noted by an investor. 40 40 Some commentators stated that certain portions of the 2005 Proposal might not be consistent with the notion that the issuer's program disclosure document serves as “the fundamental, stand-alone disclosure” for the offering of its securities. *See, e.g.* , AG Edwards. The MSRB believes that dealers generally may view the issuer's program disclosure document as the definitive source from which to obtain information about the securities they are selling to their customers. The requirement that a dealer make the revised out-of-state disclosure separately if such disclosure is not included in the program disclosure document in a manner reasonably likely to be noted by an investor is not intended to imply otherwise, consistent with prior Commission guidance regarding the obligations of underwriters and other dealers in connection with municipal issuers' disclosure materials under the federal securities laws. *See* Exchange Act Release No. 26100 (September 22, 1988), 53 FR 37778 (Section III—Municipal Underwriter Responsibilities), as modified by Exchange Act Release No. 26985 (June 28, 1989), 54 FR 28799 (Section III—Interpretation of Underwriter Responsibilities), and as reaffirmed by Exchange Act Release No. 33741 (March 9, 1994), 59 FR 12748 (Section V—Interpretive Guidance with Respect to Obligations of Municipal Securities Dealers). General Suitability Obligations *Summary.* The 2005 Proposal reaffirmed the guidance originally provided in the 2002 Notice regarding general suitability standards under Rule G-19 for recommended transactions in 529 college savings plans. The 2005 Proposal added reminders to dealers to the effect that their suitability obligation requires a meaningful analysis that establishes the reasonable grounds for believing that the recommendation is suitable and that they must have and enforce written supervisory procedures reasonably designed to ensure compliance with this obligation for every recommended transaction. The 2004 Proposal did not address suitability issues. *Comments.* No commentator opposed the 2005 Proposal's discussion of general suitability standards. *MSRB Response.* The MSRB has retained this discussion of general suitability standards. Comparative Suitability Obligation for Out-of-State Sales *Summary.* The 2005 Proposal would require a dealer to undertake a comparative suitability analysis if the dealer has recommended an out-of-state 529 college savings plan transaction to a customer who has indicated that one of his or her investment objectives is realization of state-based benefits, as contemplated under the special home state disclosure proposal. This would involve the consideration of the state-based benefits available from the customer's home state 529 college savings plan in a comparative analysis with the out-of-state 529 college savings plan being offered. Any such state-based benefits offered with respect to a particular 529 college savings plan would be considered as one of many appropriately weighted factors that have an ultimate bearing on the relative strengths of a particular investment, and the existence of state-based benefits would not create a presumption that investment in the home state 529 college savings plan is necessarily superior to an out-of-state 529 college savings plan. If a dealer were to conclude that an investment in the home state 529 college savings plan would be superior to an investment in the offered out-of-state 529 college savings plan under every reasonable scenario, then the dealer would be obligated to inform the customer of this determination and would be permitted to effect a transaction in the offered out-of-state 529 college savings plan only if the customer has directed to do so after this suitability determination has been disclosed and if the out-of-state 529 college savings plan would, without regard to the comparative analysis with the home state 529 college savings plan, be suitable for the customer under traditional suitability standards. The 2004 Proposal did not contain comparable language. *Comments.* Most commentators strongly opposed the comparative suitability proposal, 41 although two commentators conceded that, depending on the facts and circumstances, the availability of in-state benefits may be one of many appropriate factors to consider in making a suitability determination under traditional suitability standards. 42 Three commentators stated that there has been no evidence of abuse in the offering of out-of-state 529 college savings plans to justify these new requirements, observing that no enforcement actions have been taken. 43 Several commentators observed that federal securities regulation has never been premised on the concept that a dealer is obligated to determine the most suitable investment of a particular type for any customer and that the comparative suitability proposal is inconsistent with the application of the suitability rule to every other product sold by dealers. 44 Two commentators stated that comparisons are highly disfavored by NASD rules. 45 The University of Alaska noted that one result of a more stringent suitability obligation for recommendations of 529 college savings plan transactions might be that dealers would place their clients in other investment vehicles that do not carry such regulatory risk. 41 AG Edwards, CSF, CSP-Maryland, CSPN, Fidelity, Georgia, Hancock, ICI, Iowa, NAST, Ohio TTA, PFPC, SIA, T. Rowe, University of Alaska, USAA, Virginia CSP, Wachovia and West Virginia. No commentator expressed support for the comparative suitability proposal. 42 AG Edwards and Hancock. 43 CSF, ICI and USAA. NASD subsequently announced on October 26, 2005 that it had reached a settlement agreement with Ameriprise Financial Services, Inc., in connection with the failure of the firm to establish and maintain supervisory systems and procedures reasonably designed to achieve compliance with suitability obligations relating to recommended transactions in 529 college savings plans. *See www.nasd.com/web/idcplg?IdcService=SS_GET_PAGE&ssDocName=NASDW_015319.* This settlement agreement appears to have been the basis for concern expressed by Fidelity and PFPC that NASD may be incorporating the comparative suitability proposal into its enforcement posture prior to its final approval. The MSRB understands that NASD did not intend certain language included in the settlement agreement to imply that the comparative suitability proposal is currently in effect. 44 CSF, Fidelity, Hancock, PFPC, SIA, University of Alaska and USAA. 45 CSF and SIA. Many commentators viewed the comparative suitability proposal as effectively requiring dealers to become fully familiar with the terms of all 529 college savings plans before offering any particular 529 college savings plan. 46 These commentators argued that this extraordinary burden is unprecedented and is likely to significantly discourage the marketing of 529 college savings plans. NAST agreed, emphasizing that the comparative suitability proposal would have substantially increased the burden on the states themselves. Wachovia suggested that the MSRB undertake a cost-benefit analysis before adopting the comparative suitability proposal, while USAA stated that the incremental costs associated with meeting this standard would cause firms to reevaluate whether offering 529 college savings plans continues to make sense or to pass the incremental costs on to investors. AG Edwards argued that it is untenable to require a dealer to inform a client that one 529 college savings plan is unequivocally superior to another. Two other commentators stated that they are receiving anecdotal evidence that some selling dealers are withdrawing from the 529 college savings plan market in response to this proposal and to recent NASD enforcement activity. 47 CSF noted that one potential result may be that some customers who are accustomed to relying on their financial advisors and who otherwise might invest in suitable 529 college savings plans may ultimately never make such an investment. 46 CSPN (with the concurrence of CSP-Maryland, Georgia, Iowa, Ohio TTA, University of Alaska, Virginia CSP, West Virginia), Hancock, ICI, T. Rowe Price and Wachovia. 47 Fidelity and PFPC. Concerns regarding the negative impact of the comparative suitability proposal have also been detailed in press reports. *See* Charles Paikert, “MSRB to Decide on Controversial 529 Proposals,” Investment News, February 13, 2006, at 2; Terry Savage, “Political Issues Put the Hurt on College Savings,” The Street, February 10, 2006, at *www.thestreet.com/funds/investing/10267688.html;* Jilian Mincer, “Sales of 529 College Savings Plans Fell in '05 Amid Scrutiny,” Wall Street Journal, February 9, 2006, at D2; Jilian Mincer, “Disclosure Proposals for 529s Risk a Broker Backlash,” Wall Street Journal, January 3, 2006, at D2; Lauren Barack, “Will Reform Drive Brokers From 529 Sales?” Registered Rep, November 1, 2005, at *www.registeredrep.com/mag/finance_reform_drive_brokers.* SIA expressed concern that the comparison contemplated by the proposal would be difficult to implement from a practical standpoint. ICI agreed, identifying a number of specific practical concerns. Some commentators stated that the comparative suitability proposal would place inordinate focus on state benefits while effectively ignoring the many other reasons why an investor might choose to invest in an out-of-state 529 college savings plan. 48 Other commentators predicted that the potential liabilities that would arise under the comparative suitability proposal would result in many dealers limiting their sales solely to the in-state 529 college savings plan, regardless of its advantage or disadvantage. 49 CSF requested that the MSRB defer action on the comparative suitability proposal pending implementation of the planned CSPN Web site enhancement. 48 ICI, Hancock and Wachovia. 49 AG Edwards, Fidelity and PFPC. *MSRB Response.* The MSRB has determined not to retain the comparative suitability proposal, based in large measure on the potential adverse impact of this proposal and the significant steps currently in process toward dramatic improvements in the 529 college savings plan disclosure system. However, the MSRB agrees with those commentators that noted that the availability of in-state benefits may be one of many appropriate factors to consider in making a suitability determination under traditional suitability standards, depending on all the facts and circumstances. Thus, the MSRB has added guidance to this effect in the proposed rule change, in conjunction with additional guidance to the effect that dealers should consider whether a recommendation is consistent with the customer's tax status and any customer investment objectives materially related to federal or state tax consequences of an investment. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The MSRB proposes an effective date for the proposed rule change of 60 calendar days after Commission approval. Within 35 days of the date of publication of this notice in the **Federal Register** or within such longer period
(i)as the Commission may designate up to 90 days of such date if it finds such longer period to be appropriate and publishes its reasons for so finding or
(ii)as to which the self-regulatory organization consents, the Commission will: A. By order approve such proposed rule change, or B. Institute proceedings to determine whether the proposed rule change should be disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-MSRB-2006-03 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-MSRB-2006-03. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the MSRB's offices. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-MSRB-2006-03 and should be submitted on or before May 23, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 50 50 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-6555 Filed 5-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53720; File No. SR-NASD-2006-051] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Expand the Maximum Single Order Share Amount in Nasdaq's INET Facility April 25, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on April 19, 2006, the National Association of Securities Dealers, Inc.(“NASD”), through its subsidiary, the Nasdaq Stock Market, Inc. (“Nasdaq”), submitted to the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by Nasdaq. Nasdaq filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 3 which renders it effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq proposes to expand the single order maximum share amount in its INET Facility to 999,999 shares. Nasdaq will implement the proposed rule change immediately. The text of the proposed rule change is below. Proposed new language is in *italics* ; deletions are in [brackets]. 4 4 Changes are marked to the rule text that appears in the electronic NASD Manual found at *http://www.nasd.com.* Prior to the date when The NASDAQ Stock Market LLC (“NASDAQ LLC”) commences operations, NASDAQ LLC will file a conforming change to the rules of NASDAQ LLC approved in Securities Exchange Act Release No. 53128 (January 13, 2006). 4953. Order Entry Parameters
(a)INET System Orders (1)-(3) No Change. *(4) Any order in whole shares up to 999,999 shares may be entered into the System for normal execution processing.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Nasdaq's INET Facility currently operates using a 200,000 share maximum single order limit for orders sent to the New York Stock Exchange's DOT system. For all other orders, INET applies a 999,999 share single order maximum share amount. Nasdaq proposes to codify for its INET Facility a maximum single order share amount standard, for all orders, of 999,999 shares, the same share number maximum already in place in the Nasdaq Market Center. 5 The proposed rule change will ensure that the INET system provides an adequate and uniform capability to accept large-size orders as well as reduce technological complexity for Nasdaq and users of its systems by enhancing the degree of uniformity among single order share maximums across its systems. 6 5 *See* NASD Rule 4706(d)(1). 6 The single order maximum share number limit for Nasdaq's Brut Facility shall remain 1,000,099 shares. *See* NASD Rule 4903(f). 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with Section 15A of the Act, 7 in general, and furthers the objectives of Section 15A(b)(6) of the Act, 8 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, remove impediments to a free and open market and a national market system, and, in general, to protect investors and the public interest. 7 15 U.S.C. 78o-3. 8 15 U.S.C. 78o-3(6). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Nasdaq has filed the proposed rule change pursuant to Section 19(b)(3)(A) of the Act 9 and subparagraph (f)(6) of Rule 19b-4 thereunder. 10 Because the foregoing proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days from the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder. As required under Rule 19b-4(f)(6)(iii), Nasdaq provided the Commission with written notice of its intent to file the proposed rule change at least five business days prior to filing the proposal with the Commission or such shorter period as designated by the Commission. Nasdaq has requested that the Commission waive 30-day delayed operational date provisions contained in the above rule, based upon a representation that the proposed rule filing would ensure that INET users have the beneficial capability to enter larger size orders as soon as practicable. For this reason, the Commission designates the proposal to be effective and operative upon filing with the Commission. 9 15 U.S.C. 78s(b)(3)(A). 10 17 CFR 240.19b-4(f)(6). At any time within 60 days of the filing of such proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2006-051 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC, 20549-1090. All submissions should refer to File Number SR-NASD-2006-051. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of Nasdaq. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2006-051 and should be submitted on or before May 23, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 11 11 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-6556 Filed 5-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53730; File No. SR-NASD-2006-054] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change for Handling by INET and Brut of Sub-Penny Orders in Securities Listed on the New York Stock Exchange LLC or the American Stock Exchange LLC April 26, 2006. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder, 2 notice is hereby given that on April 21, 2006, the National Association of Securities Dealers, Inc. (“NASD”), through its subsidiary, The Nasdaq Stock Market, Inc. (“Nasdaq”), filed with the Securities and Exchange Commission (“Commission”) the proposed rule change as described in Items I and II below, which Items have been prepared by Nasdaq. Nasdaq has filed this proposal pursuant to Section 19(b)(3)(A) of the Act 3 and Rule 19b-4(f)(6) thereunder, 4 which renders the proposal effective upon filing with the Commission. 5 The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 15 U.S.C. 78s(b)(3)(A). 4 17 CFR 240.19b-4(f)(6). 5 On March 31, 2006, Nasdaq filed this rule proposal without designating it as immediately effective. *See* SR-NASD-2006-042. At the request of the Commission staff, Nasdaq has withdrawn that filing. I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change Nasdaq has filed with the Commission a proposed rule change for the handling by Nasdaq's INET and Brut systems of sub-penny orders priced under $1.00 for securities listed on the New York Stock Exchange LLC (“NYSE”) or the American Stock Exchange LLC (“Amex”). Nasdaq has made this filing at the request of the Commission staff. The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in [brackets]. 6 6 Changes are marked to the rule text that appears in the electronic NASD Manual found at *www.nasd.com.* Prior to the date when The NASDAQ Stock Market LLC (“NASDAQ LLC”) commences operations, NASDAQ LLC will file a conforming change to the rules of NASDAQ LLC approved in Securities Exchange Act Release No. 53128 (January 13, 2006), 71 FR 3550 (January 23, 2006). 4904. Entry and Display of Orders
(a)No change.
(b)Display of Orders—The System will display orders submitted to the System as follows:
(1)and
(2)No change.
(3)Minimum Price Variation—The minimum quotation increment for System Securities shall be $0.01 for quotations priced at or above $1.00 per share and $0.0001 for quotations priced below $1.00 per share; provided, however, that if the Securities and Exchange Commission (“SEC”) permits, with respect to any security, the display, rank or acceptance of quotations priced at or above $1.00 per share in an increment smaller than $0.01, then the minimum quotation increment for such a security shall be the minimum permitted by the SEC or $0.0001, whichever is greater. Quotations failing to meet this standard shall be rejected. *A quotation for a security listed on the New York Stock Exchange or the American Stock Exchange and properly (not in violation of this paragraph) priced in an increment of less than $0.01 will be adjusted by the System down (for bids) or up (for offers) to the nearest $0.01 increment prior to display, execution or routing. A quotation so adjusted will have no price priority over equivalent quotations that did not require adjustment under this paragraph.*
(4)No change. 4962. Minimum Quotation Increment The minimum quotation increment in the INET System for quotations of $1.00 or above in Nasdaq-listed securities and in securities listed on a national securities exchange shall be $0.01. The minimum quotation increment in the INET System for quotations below $1.00 in Nasdaq-listed securities and in securities listed on a national securities exchange shall be $0.0001. However, if the Securities and Exchange Commission (“SEC”) permits, with respect to any security, the display, rank or acceptance of quotations priced at or above $1.00 per share in an increment smaller than $0.01, then the minimum quotation increment for such a security shall be the minimum permitted by the SEC or $0.0001, whichever is greater. *A quotation for a security listed on the New York Stock Exchange or the American Stock Exchange and properly (not in violation of this paragraph) priced in an increment of less than $0.01 will be adjusted by the INET System down (for bids) or up (for offers) to the nearest $0.01 increment prior to display, execution or routing. A quotation so adjusted will have no price priority over equivalent quotations that did not require adjustment under this paragraph.* II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, Nasdaq included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. Nasdaq has prepared summaries, set forth in Sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change 1. Purpose Consistent with Rule 612 of Regulation NMS, 7 as of January 31, 2006, the Nasdaq Market Center (“NMC”) and Nasdaq's Brut and INET facilities accept quotes that are in increments of least $0.0001 if these quotes are priced below $1.00. Quotes priced above $1.00 are accepted by the NMC, Brut, and INET in increments of at least $0.01. These principles apply equally to Nasdaq-listed securities and to securities listed on other exchanges. 7 17 CFR 242.612. At the request of the Commission staff, in order to accommodate the NYSE and the Amex, the NMC continues to adjust all proper ( *i.e.* , priced under $1.00 and in increments of not less than $0.0001) sub-penny quotes in NYSE- and Amex-listed securities as soon as it receives them. 8 Offers are adjusted upwards to the next whole cent, while bids are adjusted downward to the next whole cent. However, Nasdaq's INET and Brut facilities currently do not adjust proper sub-penny quotes in NYSE- or Amex-listed securities and instead allow sub-penny executions in such securities as contemplated under Rule 612. 8 *See* Securities Exchange Act Release No. 34-53203 (Jan. 31, 2006), 71 FR 6300 (Feb. 7, 2006) (rule change to enable the NMC to continue adjusting sub-penny quotes priced below $1.00 in NYSE and Amex securities). The purpose of this filing is to implement within INET and Brut the same adjustment mechanism as was implemented earlier this year in the NMC. Specifically, proper ( *i.e.* , priced under $1.00 and in increments of not less than $0.0001) sub-penny quotes in NYSE- and Amex-listed securities will be adjusted on receipt by the Brut and INET Systems. Offers will be adjusted upwards to the next whole cent, while bids will be adjusted downward to the next whole cent. The ability of Brut or INET to accept sub-penny quotes in Nasdaq-, NYSE-, or Amex-listed securities is not affected by this proposal. As with the NMC sub-penny quote adjustments, Nasdaq views this rule change for Brut and INET, which is also being made at the request of the Commission staff, as temporary in nature because it will continue to deprive investors of the ability, envisioned in Rule 612, to trade in sub-pennies those NYSE- and Amex-listed stocks that are priced below $1.00. When Nasdaq determines that this approach is no longer appropriate, it will change the rule described herein by making an immediately effective filing with the Commission. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of Section 15A of the Act, 9 in general, and with Section 15A(b)(6) of the Act, 10 in particular, in that it is designed to promote just and equitable principles of trade. 9 15 U.S.C. 78 *o* -3. 10 15 U.S.C. 78 *o* -3(b)(6). B. Self-Regulatory Organization's Statement on Burden on Competition Nasdaq does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received from Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change:
(1)Does not significantly affect the protection of investors or the public interest;
(2)does not impose any significant burden on competition; and
(3)does not become operative for 30 days after the date of the filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 11 and Rule 19b-4(f)(6) thereunder. 12 11 15 U.S.C. 78s(b)(3)(A). 12 17 CFR 240.19b-4(f)(6). As required by Rule 19b-4(f)(6)(iii) under the Act, the Exchange also provided with the Commission with written notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of the proposed rule change. The Exchange has asked the Commission to waive the 30-day operative delay and allow the proposed rule change to become operative on May 1, 2006. The Commission hereby grants that request. 13 The Commission believes that the Exchange's proposal to round away all proper sub-penny quotes in NYSE- and Amex-listed securities immediately upon receipt by Brut or INET raises no new regulatory issues, as Nasdaq implemented the same adjustment mechanism earlier this year in the NMC and Rule 612 does not require that accepted sub-penny quotes priced below $1.00 be displayed, executed, or routed in sub-pennies. Furthermore, this rule change will bring the quoting conventions of two Nasdaq trading facilities, Brut and INET, into line with those of the NMC without any further delay, thereby reducing the possibility of investor confusion. Therefore, the Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest. 13 For purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. *See* 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send an e-mail to *rule-comments@sec.gov.* Please include File Number SR-NASD-2006-054 on the subject line. Paper comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, Station Place, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NASD-2006-054. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro.shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NASD. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NASD-2006-054 and should be submitted on or before May 23, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 Nancy M. Morris, Secretary. 14 17 CFR 200.30-3(a)(12). [FR Doc. E6-6597 Filed 5-1-06; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-53728; File Nos. SR-NYSE-2006-13; SR-CBOE-2006-14] Self-Regulatory Organizations; New York Stock Exchange LLC; Chicago Board Options Exchange, Incorporated; Notice of Extension of Comment Periods for the Proposed Rule Changes Relating to Customer Portfolio Margining Requirements April 26, 2006. On March 2, 2006, the New York Stock Exchange LLC (“NYSE”), and on February 2, 2006, the Chicago Board Options Exchange, Incorporated (“CBOE”), filed with the Securities and Exchange Commission (“Commission”) proposed rule changes pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act” or “Exchange Act”) 1 and Rule 19b-4 thereunder, 2 that would further expand the scope of products that are eligible for treatment as part of their respective customer portfolio margin pilot programs. 3 A complete description of the proposed rule changes is found in the notices of filing, which were published in the **Federal Register** on April 6, 2006. 4 The comment periods expire on April 27, 2006. 5 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Exchange Act Release No. 52031 (July 14, 2005), 70 FR 42130 (July 21, 2005) (SR-NYSE-2002-19); and Exchange Act Release No. 52032 (July 14, 2005), 70 FR 42130 (July 21, 2005) (SR-CBOE-2002-03). On July 14, 2005, the Commission approved on a pilot basis expiring July 31, 2007, amendments to NYSE Rule 431 and CBOE Rule 12.4 to permit the use of customer portfolio margining for certain specified products ( *e.g.* , listed, broad-based U.S. index options and warrants, along with any underlying instruments), as an alternative to the strategy based margin requirements required by the NYSE's and CBOE's margin rules. 4 *See* Exchange Act Release No. 53576 (March 30, 2006), 71 FR 17519 (April 6, 2006) (SR-CBOE-2006-14); and Exchange Act Release No. 53577 (March 30, 2006), 71 FR 17539 (April 6, 2006) (SR-NYSE-2006-13). 5 *Id* . In response to requests to extend the comment periods, and to give the public additional time to comment on the proposed rule changes, the Commission has decided to extend the comment periods pursuant to Section 19(b)(2) of the Act. 6 Accordingly, the comment periods shall be extended until May 11, 2006. 6 15 U.S.C. 78s(b)(2). Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Exchange Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission's Internet comment form ( *http://www.sec.gov/rules/sro.shtml* ); or • Send e-mail to *rule-comments@sec.gov* . Please include File Number SR-NYSE-2006-13 or SR-CBOE-2006-14 on the subject line. Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSE-2006-13 or SR-CBOE-2006-14. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site ( *http://www.sec.gov/rules/sro/shtml* ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for inspection and copying in the Commission's Public Reference Room. Copies of such filing also will be available for inspection and copying at the principal office of the NYSE or CBOE. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submission should refer to File Number SR-NYSE-2006-13 or SR-CBOE-2006-14 and should be submitted on or before May 11, 2006. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 7 7 17 CFR 200.30-3(a)(12). Nancy M. Morris, Secretary. [FR Doc. E6-6596 Filed 5-1-06; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 5398] Culturally Significant Objects Imported for Exhibition Determinations: “Baksy Krater” AGENCY: Department of State. ACTION: Notice, correction. SUMMARY: On April 5, 2006, notice was published on page 17148 of the **Federal Register** (volume 71, number 65) of determinations made by the Department of State pertaining to the exhibition “Baksy Krater.” The referenced notice is corrected as to the date of the exhibition, which will be at the J. Paul Getty Museum's Villa, Malibu, CA, from on or about June 14, 2006, until on or about September 3, 2007, and at possible additional venues yet to be determined. Public Notice of this correction is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Richard Lahne, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone:
(202)453-8058). The address is U.S. Department of State, SA-44, 301 4th Street, SW., Room 700, Washington, DC 20547-0001. Dated: April 24, 2006. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E6-6610 Filed 5-1-06; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Public Notice 5399] Culturally Significant Objects Imported for Exhibition Determinations: “Rubens and Brueghel: A Working Friendship” SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999, Delegation of Authority No. 236 of October 19, 1999, as amended, and Delegation of Authority No. 257 of April 15, 2003 [68 FR 19875], I hereby determine that the objects to be included in the exhibition “Rubens and Brueghel: A Working Friendship,” imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at The J. Paul Getty Museum, Los Angeles, CA, from on or about July 5, 2006, until on or about September 24, 2006, and at possible additional venues yet to be determined, is in the national interest. Public Notice of these Determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, including a list of the exhibit objects, contact Julianne Simpson, Attorney-Adviser, Office of the Legal Adviser, U.S. Department of State (telephone: 202/453-8049). The address is U.S. Department of State, SA-44, 301 4th Street, SW., Room 700, Washington, DC 20547-0001. Dated: April 21, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. E6-6609 Filed 5-1-06; 8:45 am] BILLING CODE 4710-05-P DEPARTMENT OF STATE [Public Notice 5400] Bureau of Educational and Cultural Affairs
(ECA)Request for Grant Proposals: FY 2006 U.S.-Russia Language, Technology, Math, and Sciences
(LTMS)Teacher Program *Announcement Type:* New Cooperative Agreement. *Funding Opportunity Number:* ECA/A/S/X-06-13. *Catalog of Federal Domestic Assistance Number:* 00.000. *Key Dates:* Application Deadline, June 5, 2006. *Executive Summary:* The Teacher Exchange Branch in the Office of Global Educational Programs of the Bureau of Educational and Cultural Affairs (ECA), U.S. Department of State, announces an open competition for an assistance award in the amount of $700,000 to support the FY 2006 U.S.—Russia Language, Technology, Math, and Sciences
(LTMS)Teacher Program. This program provides a three- to four-week professional development program in the U.S. for secondary-level teachers from Russia, followed by a program in Russia for U.S. teachers and the Russian educators, and a series of workshops in Russia led by the Russian teachers for their colleagues. U.S. organizations meeting the provisions described in Internal Revenue Code section 26 501(c)(3) are eligible to apply. In a proposal, applicants should address their capacity to recruit teachers of English as a Foreign Language (EFL), history, social studies, math, science, and information technology in Russia. I. Funding Opportunity Description Authority Overall grant making authority for this program is contained in the Mutual Educational and Cultural Exchange Act of 1961, Public Law 87-256, as amended, also known as the Fulbright-Hays Act. The purpose of the Act is “to enable the Government of the United States to increase mutual understanding between the people of the United States and the people of other countries* * *; to strengthen the ties which unite us with other nations by demonstrating the educational and cultural interests, developments, and achievements of the people of the United States and other nations * * * and thus to assist in the development of friendly, sympathetic and peaceful relations between the United States and the other countries of the world.” The funding authority for the program above is provided through legislation. Purpose *Overview:* The U.S.-Russia Language, Technology, Math, and Sciences
(LTMS)Teacher Program will bring outstanding secondary school teachers from Russia to the United States to augment their subject area teaching skills and knowledge of the U.S., as well as provide opportunities for U.S. teachers to participate in a professional development program in Russia. The goals of the program are:
(1)To provide opportunities for Russian and U.S. teachers to learn from one another's education systems and foster excellence in the classroom through increased exchange of ideas and expertise;
(2)to develop the leadership skills of Russian and U.S. teachers by providing opportunities to share educational best practices in professional development through seminars and workshops in the United States and Russia;
(3)to raise the status of teaching in Russia and create among key Russian professionals a deeper understanding of the U.S., so that they may share their experiences of living in a diverse democratic society with students and teachers in their home communities. Proposals should outline six distinct program components: A. Program publicity, recruitment, and selection in Russia. B. Program publicity, recruitment, and selection of U.S. teachers. C. Two three- to four-week U.S.-based institutes (each comprising a group of 16 teachers from Russia): The first institute should support teachers of English as a Foreign Language (EFL), social studies, and history and should be given in English in spring of 2007; the second institute should support teachers of math, science, and information technology and should be given in Russian in fall of 2007. Russian participants should be teaching professionals with at least five to ten years of experience. Teachers participating in the English-speaking institute should have strong written and oral English skills, as evidenced by an institutional TOEFL score of 195 CBT or higher. The second institute, for teachers from the disciplines of math, science, and information technology, will be conducted in Russian with facilitators and translators; D. Visit of a group of eight U.S. teachers to the home schools of the Russian teachers who participated in the U.S. program to share best practices during the 2007-08 academic year; E. Professional development workshops in Russia led by teachers who participated in the U.S. program for their non-English-speaking colleagues; and F. Follow-On Activities. Applicants should propose a calendar that will include a coherent sequence of the various program phases. A. Recruitment/Selection of Russian Teachers Applicants should propose creative, cost-efficient recruitment and selection strategies involving an on-the-ground partner organization in Russia to attract qualified teachers to the program. The recruitment strategy should ensure a pool of highly qualified candidates, while also limiting the number that will not be accepted. Applicants are invited to propose, based on their experience and knowledge, appropriate grant-to-applicant ratios that should be targeted in the recruitment effort. Please include letters of project commitment from the on-the-ground partner and describe in detail relevant previous projects undertaken by the organization or individuals. A sub-grant agreement and an accompanying budget are required. Please include this documentation with your proposal submission. The cooperating institution, together with the local partner, should collaborate in Russia with the English Language Officer
(ELO)on the program for English-speaking teachers. The ELO, based at the U.S. Embassy in Moscow, is a credentialed, experienced Foreign Service and English as a Foreign Language officer who works with the Russian Ministry of Education, universities and teacher-training officials on targeted English language programs. The ELO may participate in reviewing applications, interviewing and nominating candidates, and approving and monitoring follow-up activities. In all cases, the top candidates' applications will be submitted to the cooperating institution, which should organize external peer review panels to determine the final selection of candidates in collaboration with ECA. B. Recruitment and Selection of U.S. Teachers The cooperating institution should invite applications from outstanding U.S. teachers in the fields of English, English as a Foreign Language (EFL), social studies, history, math, science, and information technology. In consultation with the Teacher Exchange Branch (ECA/A/S/X), the cooperating institution should select approximately 8 teachers for participation. C. U.S. School-Based Internships/Professional Development Institutes Two competitively selected schools of education at U.S. universities should coordinate the professional development institutes—one for the spring institute in English, history, and social studies, and one for the fall institute in math, science, and information technology. The cooperating institution should administer an open sub-grant competition among U.S. schools of education to host the teachers. The cooperating institution should arrange a three-day orientation program in Washington, DC, for each group of Russian teachers. Then, the teachers will travel to the U.S. host university for the three-to four-week institute. Each program will conclude with a two- or three-day conference and debriefing session at the host university. For each cohort of participants, the institutes should provide:
(1)Intensive training in teaching methodologies in the Teaching of English as a Foreign Language, social studies, civics, history, or math, science, and technology, especially student-centered and applied or problem-based learning;
(2)Training in the use of technology appropriate for the Russian classroom (all subjects) and in the use of computers for Internet research and word processing;
(3)Consultations with leading U.S. teacher training and curriculum development specialists and practitioners;
(4)Visits to various types of U.S. schools to observe a variety of teaching methods (inquiry, applied/problem-based learning, active classroom, group projects, etc.);
(5)Individual and group work periods for research and curriculum writing activities;
(6)Involvement with Americans at civic and volunteer organizations, at school board meetings, parent-teacher conferences or other community and cultural activities, and through home stays;
(7)The English-speaking group should be provided a school-based internship with U.S. mentor teachers and opportunities to teach or team-teach in a U.S. classroom.
(8)At the end of each institute, the host university should organize a conference/debriefing meeting with the visiting Russian educators and the selected U.S. teachers who will travel to Russia. The conference may include joint presentations, poster sessions or round-table discussions on topics such as technology in the classroom, effective instruction, teacher professional development, school partnerships, and civic education. D. Russia Visit The program will provide a two-week visit to Russia for 8 U.S. teachers to foster school linkages and collaboration on joint projects. The visits should feature the sharing of best practices, team-teaching with counterparts abroad, seminars on methodology, and opportunities to learn from regional master teachers about teaching styles, curriculum, and educational issues in Russia. The cooperating institution should work with ECA/A/S/X and international counterparts to identify and arrange host placements in Russia for the U.S. teachers. E. Professional Development Workshops in Russia The third component, which will take place after the Russian participants return home, is a series of workshops they will conduct for their non-English-speaking colleagues. Proposals should outline a plan for Russian teachers who have taken part in the program to organize and lead professional development workshops in Russia in summer 2008, with the collaboration and guidance of U.S. education consultants from the host universities. The workshops are designed to reach as many (non-English-speaking, particularly) Russian teachers as possible. While still in the U.S., the teachers should develop curriculum units to be used in their Russian classrooms. During the in-country workshops, the participants in the U.S. program should share their curriculum units with fellow teachers, as well as information they received while on the exchange about student-centered learning, applied and problem-based learning, technology in education, civic education, and new pedagogical methods. The participating teachers and their host university education consultants should develop the workshops in coordination with the cooperating institution, relevant in-country non-governmental organization, the Russian Ministry of Education, the U.S. Embassy in Moscow (including the ELO for workshops in EFL, where appropriate), and the ECA Teacher Exchange Branch. The Bureau will work with the recipient of this cooperative agreement award on administrative and program issues and questions as they arise over the duration of the award. F. Follow-On Activities After the Russian participants return home, follow-on programming will take place. The Russian teachers will be eligible to apply for small grants to purchase essential materials for their schools, to offer follow-on training for other teachers (in addition to the workshops previously described), to open a teacher resource center, and to conduct other activities that will build on the exchange visits. The development and approval of follow-on grants must be coordinated by the cooperating institution with the relevant non-governmental organizations, the U.S. Embassy in Moscow (including the ELO, where appropriate), and the Teacher Exchange Branch. Cooperating institutions' proposals should allot a total of $40,000 to fund a total of 10 or 12 small grants. Program Planning and Implementation Applicants are requested to submit a narrative outlining a comprehensive strategy for the administration and implementation of the U.S.-Russia Language, Technology, Math, and Sciences
(LTMS)Teacher Program. The narrative should include a proposed design for the institutes, a strategy for selecting university hosts and for cooperating with them through subgrants, a plan for recruiting, selecting, and placing Russian teachers at the U.S. institutes, a plan for monitoring the teachers' academic and professional programs, an idea for the end-of-program debriefing/conference for Russian and U.S. teachers, a design for the Russia visits by U.S. teachers, and a proposal for follow-on support. The comprehensive program strategy should reflect a vision for the program as a whole, interpreting the goals of the U.S.-Russia LTMS Teacher Program with creativity and providing innovative ideas for the program. The strategy should include a description of how the various components of the program will be integrated to build upon and reinforce one another. Pending availability of funds, this grant should begin on September 1, 2006, and will run through June 30, 2008. In a cooperative agreement, ECA's Teacher Exchange Branch will be substantially involved in program activities above and beyond routine grant monitoring. ECA/A/S/X activities and responsibilities for this program are as follows: • Formulation of program policy; • Clearing texts and program guidelines for publication; • Approval of recruitment mechanisms and the selection of Russian and U.S. teachers; • Review and approval of solicitation materials for sub-grant competition of university hosts; • Review and approval of the university-based program schedules and enhancement activities for Russian teachers, the Washington, DC, orientation and the end-of-program debriefing schedules; and • Approval of schedules for in-country workshops and follow-on awards. II. Award Information *Type of Award:* Cooperative Agreement. ECA's level of involvement in this program is listed under number I above. *Fiscal Year Funds:* 2006. *Approximate Total Funding:* $700,000. *Approximate Number of Awards:* 1. *Approximate Average Award:* Pending availability of funds, $700,000. *Anticipated Award Date:* Pending availability of funds, September 1, 2006. *Anticipated Project Completion Date:* June 30, 2008. *Additional Information:* Pending successful implementation of this program and the availability of funds in subsequent fiscal years, it is ECA's intent to renew this grant for two additional fiscal years before openly competing it again. III. Eligibility Information *III.1. Eligible applicants:* Applications may be submitted by public and private non-profit organizations meeting the provisions described in Internal Revenue Code section 26 U.S.C. 501(c)(3). *III.2. Cost Sharing or Matching Funds:* There is no minimum or maximum percentage required for this competition. However, the Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. When cost sharing is offered, it is understood and agreed that the applicant must provide the amount of cost sharing as stipulated in its proposal and later included in an approved grant agreement. Cost sharing may be in the form of allowable direct or indirect costs. For accountability, applicants must maintain written records to support all costs, which are claimed as their contribution, as well as costs to be paid by the Federal government. Such records are subject to audit. The basis for determining the value of cash and in-kind contributions must be in accordance with OMB Circular A-110, (Revised), Subpart C.23—Cost Sharing and Matching. In the event you do not provide the minimum amount of cost sharing as stipulated in the approved budget, ECA's contribution will be reduced in like proportion. *III.3 Other Eligibility Requirements:* Bureau grant guidelines require that organizations with less than four years experience in conducting international exchanges be limited to $60,000 in Bureau funding. ECA anticipates issuing one award in an amount up to $700,000 to support program and administrative costs required to implement this exchange program. Therefore, organizations with less than four years experience in conducting international exchanges are ineligible to apply under this competition. The Bureau encourages applicants to provide maximum levels of cost sharing and funding in support of its programs. IV. Application and Submission Information Note: Please read the complete announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. *IV.1. Contact Information to Request an Application Package:* Please contact Patricia Mosley of the Teacher Exchange Branch, ECA/A/S/X, Room 349, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547, telephone: (202)453-8897, fax (202)453-8890, e-mail: *MosleyPJ@state.gov* to request a Solicitation Package. Please refer to the Funding Opportunity Number ECA/A/S/X-06-13 when making your request. Alternatively, an electronic application may be obtained from grants.gov. Please see section IV.3f. for further information. The Solicitation Package contains the Proposal Submission Instruction
(PSI)document which consists of required application forms, and standard guidelines for proposal preparation. It also contains the Project Objectives, Goals and Implementation
(POGI)document, which provides specific information, award criteria and budget instructions tailored to this competition. *IV.2. To Download a Solicitation Package Via Internet:* The entire Solicitation Package may be downloaded from the Bureau's Web site at *http://exchanges.state.gov/education/rfgps/menu.htm* or from the Grants office Web site at *http://www.grants.gov.* Please read all information before downloading. *IV.3. Content and Form of Submission:* Applicants must follow all instructions in the Solicitation Package. The original and seven copies of the application should be sent per the instructions under IV.3f. “Application Deadline and Methods of Submission section” below. *IV.3a.* You are required to have a Dun and Bradstreet Data Universal Numbering System
(DUNS)number to apply for a grant or cooperative agreement from the U.S. Government. This number is a nine-digit identification number, which uniquely identifies business entities. Obtaining a DUNS number is easy and there is no charge. To obtain a DUNS number, access *http://www.dunandbradstreet.com* or call 1-866-705-5711. Please ensure that your DUNS number is included in the appropriate box of the SF-424 which is part of the formal application package. *IV.3b.* All proposals must contain an executive summary, proposal narrative and budget. Please refer to the Solicitation Package. It contains the mandatory Proposal Submission Instructions
(PSI)document and the Project Objectives, Goals and Implementation
(POGI)document for additional formatting and technical requirements. *IV.3c.* You must have nonprofit status with the IRS at the time of application. If your organization is a private nonprofit which has not received a grant or cooperative agreement from ECA in the past three years, or if your organization received nonprofit status from the IRS within the past four years, you must submit the necessary documentation to verify nonprofit status as directed in the PSI document. Failure to do so will cause your proposal to be declared technically ineligible. *IV.3d.* Please take into consideration the following information when preparing your proposal narrative: *IV.3d.1 Adherence to All Regulations Governing the J Visa:* The Bureau of Educational and Cultural Affairs is placing renewed emphasis on the secure and proper administration of Exchange Visitor (J visa) Programs and adherence by grantees and sponsors to all regulations governing the J visa. Therefore, proposals should demonstrate the applicant's capacity to meet all requirements governing the administration of the Exchange Visitor Programs as set forth in 22 CFR part 62, including the oversight of Responsible Officers and Alternate Responsible Officers, screening and selection of program participants, provision of pre-arrival information and orientation to participants, monitoring of participants, proper maintenance and security of forms, record-keeping, reporting and other requirements. An employee of the Bureau will be named the Responsible Officer for the program; employees of the cooperating institution will be named Alternate Responsible Officers and will be responsible for issuing DS-2019 forms to participants and performing all actions to comply with the Student and Exchange Visitor Information System (SEVIS). A copy of the complete regulations governing the administration of Exchange Visitor
(J)programs is available at *http://exchanges.state.gov* or from: United States Department of State, Office of Exchange Coordination and Designation, ECA/EC/ECD—SA-44, Room 734, 301 4th Street, SW., Washington, DC 20547. Telephone:
(202)203-5029. FAX:
(202)453-8640. Please refer to Solicitation Package for further information. *IV.3.d.2. Diversity, Freedom and Democracy Guidelines:* Pursuant to the Bureau's authorizing legislation, programs must maintain a non-political character and should be balanced and representative of the diversity of American political, social, and cultural life. “Diversity” should be interpreted in the broadest sense and encompass differences including, but not limited to ethnicity, race, gender, religion, geographic location, socio-economic status, and disabilities. Applicants are strongly encouraged to adhere to the advancement of this principle both in program administration and in program content. Please refer to the review criteria under the 'Support for Diversity' section for specific suggestions on incorporating diversity into your proposal. Public Law 104-319 provides that “in carrying out programs of educational and cultural exchange in countries whose people do not fully enjoy freedom and democracy,” the Bureau “shall take appropriate steps to provide opportunities for participation in such programs to human rights and democracy leaders of such countries.” Public Law 106-113 requires that the governments of the countries described above do not have inappropriate influence in the selection process. Proposals should reflect advancement of these goals in their program contents, to the full extent deemed feasible. *IV.3.d.3. Program Monitoring and Evaluation:* Proposals must include a plan to monitor and evaluate the project's success, both as the activities unfold and at the end of the program. The Bureau recommends that your proposal include a draft survey questionnaire or other technique plus a description of a methodology to use to link outcomes to original project objectives. The Bureau expects that the cooperating institution will track participants and partners and be able to respond to key evaluation questions, including satisfaction with the program, learning as a result of the program, changes in behavior as a result of the program, and effects of the program on institutions (institutions in which participants work or partner institutions). The evaluation plan should include indicators that measure gains in mutual understanding as well as substantive knowledge. Successful monitoring and evaluation depend heavily on setting clear goals and outcomes at the outset of a program. Your evaluation plan should include a description of your project's objectives, your anticipated project outcomes, how and when you intend to measure these outcomes (performance indicators), and how these outcomes relate to the above goals. The more that outcomes are “smart” (specific, measurable, attainable, results-oriented, and placed in a reasonable time frame), the easier it will be to conduct the evaluation. You should also show how your project objectives link to the goals of the program described in this RFGP. Your monitoring and evaluation plan should clearly distinguish between program *outputs* and *outcomes. Outputs* are products and services delivered, often stated as an amount. Output information is important to show the scope or size of project activities, but it cannot substitute for information about progress towards outcomes or the results achieved. Examples of outputs include the number of people trained or the number of seminars conducted. *Outcomes,* in contrast, represent specific results a project is intended to achieve and is usually measured as an extent of change. Findings on outputs and outcomes should both be reported, but the focus should be on outcomes. We encourage you to assess the following four levels of outcomes, as they relate to the program goals set out in the RFGP (listed here in increasing order of importance): 1. Participant satisfaction with the program and exchange experience. 2. Participant learning, such as increased knowledge, aptitude, skills, and changed understanding and attitude. Learning includes both substantive (subject-specific) learning and mutual understanding. 3. Participant behavior, concrete actions of teachers to apply knowledge in home schools and community; interpretation and explanation of experiences and new knowledge gained to school administrators and other colleagues; continued contacts between participants and others. 4. Institutional changes influencing policy improvement, such as increased collaboration and partnerships, policy reforms, new programming, and organizational improvements. Please note: Consideration should be given to the appropriate timing of data collection for each level of outcome. For example, satisfaction is usually captured as a short-term outcome, whereas behavior and institutional changes are normally considered longer-term outcomes. Overall, the quality of your monitoring and evaluation plan will be judged on how well it
(1)specifies intended outcomes;
(2)gives clear descriptions of how each outcome will be measured;
(3)identifies when particular outcomes will be measured; and
(4)provides a clear description of the data collection strategies for each outcome ( *i.e.* , surveys, interviews, or focus groups). (Please note that evaluation plans that deal only with the first level of outcomes [satisfaction] will be deemed less competitive under the present evaluation criteria.) ECA/A/S/X and the Bureau's Office of Policy and Evaluation will work with the recipient of this cooperative agreement to develop appropriate evaluation goals and performance indicators. The cooperating institution will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. *IV.3.d.4. Describe your plans for staffing:* Please provide a staffing plan which outlines the responsibilities of each staff person and explains which staff member will be accountable for each program responsibility. Wherever possible please streamline administrative processes. *IV.3e.* Please take the following information into consideration when preparing your budget: *IV.3.e.1.* HJ Applicants must submit a comprehensive budget for the program. The budget should not exceed $700,000 for program and administrative costs. There must be a summary budget as well as breakdowns reflecting both administrative and program budgets for host campus and foreign teacher involvement in the program. Applicants should provide separate sub-budgets for the professional institutes/internships, Russia visits by U.S. teachers, and the in-country workshop components in Russia. The summary and detailed administrative and program budgets should be accompanied by a narrative which provides a brief rationale for each line item including a methodology for estimating appropriate average maintenance allowance levels and tuition costs (as applicable) for the participants, and the number that can be accommodated at the levels proposed. The total administrative costs funded by the Bureau must be reasonable and appropriate. *IV.3.e.2.* Allowable costs for the program and additional budget guidance are outlined in detail in the POGI document. Please refer to the Solicitation Package for complete budget guidelines and formatting instructions. *IV.3f. Application Deadline and Methods of Submission:* *Application Deadline Date:* Monday, June 5, 2006. *Reference Number:* ECA/A/S/X-06-13. *Methods of Submission:* Applications may be submitted in one of two ways:
(1)In hard copy, via a nationally recognized overnight delivery service ( *i.e.* , DHL, Federal Express, UPS, Airborne Express, or U.S. Postal Service Express Overnight Mail, etc.), or
(2)Electronically through *http://www.grants.gov* . Along with the Project Title, all applicants must enter the above Reference Number in Box 11 on the SF-424 contained in the mandatory Proposal Submission Instructions
(PSI)of the solicitation document. *IV.3f.1 Submitting Printed Applications:* Applications must be shipped no later than the above deadline. Delivery services used by applicants must have in-place, centralized shipping identification and tracking systems that may be accessed via the Internet and delivery people who are identifiable by commonly recognized uniforms and delivery vehicles. Proposals shipped on or before the above deadline but received at ECA more than seven days after the deadline will be ineligible for further consideration under this competition. Proposals shipped after the established deadlines are ineligible for consideration under this competition. ECA will *not* notify you upon receipt of application. It is each applicant's responsibility to ensure that each package is marked with a legible tracking number and to monitor/confirm delivery to ECA via the Internet. Delivery of proposal packages *may not* be made via local courier service or in person for this competition. Faxed documents will not be accepted at any time. Only proposals submitted as stated above will be considered. Important note: When preparing your submission please make sure to include one extra copy of the completed SF-424 form and place it in an envelope addressed to “ECA/EX/PM”. The original and seven copies of the application should be sent to: U.S. Department of State, SA-44, Bureau of Educational and Cultural Affairs, Ref.: ECA/A/S/X-06-13, Program Management, ECA/EX/PM, Room 534, 301 4th Street, SW., Washington, DC 20547. Applicants submitting hard-copy applications must also submit the “Executive Summary” and “Proposal Narrative” sections of the proposal in text (.txt) format on a PC-formatted disk. The Bureau will provide these files electronically to the appropriate Public Affairs section at the U.S. embassy for its review. *IV.3f.2. Submitting Electronic Applications:* Applicants have the option of submitting proposals electronically through Grants.gov ( *http://www.grants.gov* ). Complete solicitation packages are available at Grants.gov in the “Find” portion of the system. Please follow the instructions available in the “Get Started” portion of the site ( *http://www.grants.gov/GetStarted* ). Applicants have until midnight (12 a.m.) of the closing date to ensure that their entire applications have been uploaded to the grants.gov site. Applications uploaded to the site after midnight of the application deadline date will be automatically rejected by the grants.gov system, and will be technically ineligible. Applicants will receive a confirmation e-mail from grants.gov upon the successful submission of an application. ECA will *not* notify you upon receipt of electronic applications. *IV.3g. Intergovernmental Review of Applications:* Executive Order 12372 does not apply to this program. V. Application Review Information V.1. Review Process The Bureau will review all proposals for technical eligibility. Proposals will be deemed ineligible if they do not fully adhere to the guidelines stated herein and in the Solicitation Package. All eligible proposals will be reviewed by the program office, as well as the Public Diplomacy section overseas, where appropriate. Eligible proposals will be subject to compliance with Federal and Bureau regulations and guidelines and forwarded to Bureau grant panels for advisory review. Proposals may also be reviewed by the Office of the Legal Adviser or by other Department elements. Final funding decisions are at the discretion of the Department of State's Assistant Secretary for Educational and Cultural Affairs. Final technical authority for assistance awards (cooperative agreements) resides with the Bureau's Grants Officer. Review Criteria Technically eligible applications will be competitively reviewed according to the criteria stated below. These criteria are not rank ordered and all carry equal weight in the proposal evaluation: 1. *Program Development and Management:* The proposal narrative should exhibit originality, substance, precision, and relevance to the Bureau's mission as well as the objectives of the U.S.-Russia Language, Technology, Math, and Sciences
(LTMS)Teacher Program. It should include an effective, feasible program plan for U.S.-based institutes and in-country workshops in Russia and demonstrate how the distribution of administrative resources will ensure adequate attention to program administration, including host institution selection. 2. *Multiplier effect/impact:* The proposed administrative strategy should maximize the program's potential to build on the participants' training upon their return to their countries. 3. *Support of Diversity:* Proposals should demonstrate substantive support of the Bureau's policy on diversity. Achievable and relevant features should be cited in both program administration (selection of participants, host institutions chosen through sub-grants, and program evaluation) and program content, resource materials and follow-up activities. 4. *Institutional Capacity and Record:* Proposals should demonstrate an institutional record of successful exchange programs, including responsible fiscal management and full compliance with all reporting requirements for past Bureau grants as determined by Bureau Grants Staff. Proposed personnel and institutional resources should be adequate and appropriate to achieve the program's goals. 5. *Follow-on and Alumni Activities:* Proposals should provide a plan for continued follow-on activity (both with and without Bureau support) ensuring that the U.S.-Russia LTMS Teacher Program training is not an isolated event. Activities should include administering a small grants competition for alumni, and tracking and maintaining updated lists of all alumni and facilitating follow-up activities. 6. *Project Evaluation:* Proposals should include a plan and methodology to evaluate the U.S.-Russia Language, Technology, Math, and Sciences
(LTMS)Teacher Program's degree of success in meeting program objectives, both as the activities unfold, at the end of the first program iteration, and at their conclusion. Draft survey questionnaires or other techniques plus description of methodologies to use to link outcomes to original project objectives are recommended. Successful applicants will be expected to submit intermediate reports after each project component is concluded, or quarterly, whichever is less frequent. 7. *Cost-effectiveness and Cost Sharing:* The overhead and administrative components of the proposal, including salaries and honoraria, should be kept as low as possible. All other items should be necessary and appropriate. Proposals should maximize cost-sharing through other private sector support as well as institutional direct funding contributions. VI. Award Administration Information VI.1a. Award Notices Final awards cannot be made until funds have been appropriated by Congress, allocated and committed through internal Bureau procedures. Successful applicants will receive an Assistance Award Document
(AAD)from the Bureau's Grants Office. The AAD and the original grant proposal with subsequent modifications (if applicable) shall be the only binding authorizing document between the recipient and the U.S. Government. The AAD will be signed by an authorized Grants Officer, and mailed to the recipient's responsible officer identified in the application. Unsuccessful applicants will receive notification of the results of the application review from the ECA program office coordinating this competition. VI.2. Administrative and National Policy Requirements Terms and Conditions for the Administration of ECA agreements include the following: Office of Management and Budget Circular A-122, “Cost Principles for Nonprofit Organizations.” Office of Management and Budget Circular A-21, “Cost Principles for Educational Institutions.” OMB Circular A-87, “Cost Principles for State, Local and Indian Governments”. OMB Circular No. A-110 (Revised), Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and other Nonprofit Organizations. OMB Circular No. A-102, Uniform Administrative Requirements for Grants-in-Aid to State and Local Governments. OMB Circular No. A-133, Audits of States, Local Government, and Non-profit Organizations. Please reference the following Web sites for additional information: *http://www.whitehouse.gov/omb/grants* . *http://exchanges.state.gov/education/grantsdiv/terms.htm#articleI* . *VI.3. Reporting Requirements:* You must provide ECA with a hard copy original plus one copy of the following reports: Quarterly financial reports; Annual program reports for the first and second year of the agreement; and final program and financial reports no more than 90 days after the expiration of the award. The cooperating institution will be required to provide reports analyzing their evaluation findings to the Bureau in their regular program reports. (Please refer to IV. Application and Submission Instructions (IV.3.d.3) above for Program Monitoring and Evaluation information. All data collected, including survey responses and contact information, must be maintained for a minimum of three years and provided to the Bureau upon request. All reports must be sent to the ECA Grants Officer and ECA Program Officer listed in the final assistance award document. VII. Agency Contacts For questions about this announcement, contact: Michael Kuban, Office of Global Educational Programs, ECA/A/S/X, Room 349, U.S. Department of State, SA-44, 301 4th Street, SW., Washington, DC 20547, telephone: 202-453-8878, fax 202-453-8890, *KubanMM@state.gov* . All correspondence with the Bureau concerning this RFGP should reference the title and number ECA/A/S/X-06-13. Please read the complete **Federal Register** announcement before sending inquiries or submitting proposals. Once the RFGP deadline has passed, Bureau staff may not discuss this competition with applicants until the proposal review process has been completed. *Notice:* The terms and conditions published in this RFGP are binding and may not be modified by any Bureau representative. Explanatory information provided by the Bureau that contradicts published language will not be binding. Issuance of the RFGP does not constitute an award commitment on the part of the Government. The Bureau reserves the right to reduce, revise, or increase proposal budgets in accordance with the needs of the program and the availability of funds. Awards made will be subject to periodic reporting and evaluation requirements per section VI.3 above. Dated: April 21, 2006. C. Miller Crouch, Principal Deputy Assistant Secretary, Bureau of Educational and Cultural Affairs, Department of State. [FR Doc. 06-4122 Filed 5-1-06; 8:45 am]
Connectionstraces to 15
Traces to 15 documents
11 references not yet in our index
  • Pub. L. 100-503
  • 17 CFR 240.17
  • 17 CFR 249
  • 17 USC 78a
  • 17 CFR 240.19
  • 15 USC 78
  • 79 Stat. 985
  • Pub. L. 87-256
  • 22 CFR 62
  • Pub. L. 104-319
  • Pub. L. 106-113
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cites case law
Notices
Notice of Records Used in Computer Matching Programs; Notification to individuals who are beneficiaries under the Railroad Retirement Act
U.S.C.§ 552a
U.S.C.§ 3501
U.S.C.§ 78s
U.S.C.§ 78o–4
U.S.C.§ 552
C.F.R.§ 200.30-3
U.S.C.§ 78o–3
C.F.R.§ 242.612
U.S.C.§ 78c
Pub. L.Pub. L. 100-503
Cite17 CFR 240.17
Cite17 CFR 249
Cites 26 · showing 12Cited by 0 across 0 sources
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