2013-02-11T07:44:44-06:00 2012-09-30 861065772 DELOITTE TAX LLP 1750 TYSONS BLVD MCLEAN VA 221024219 990 2011-10-01 521042433 MUNICIPAL SECURITIES RULEMAKING BOARD MUNI 7037976600 1900 DUKE STREET ALEXANDRIA VA 223143412 LYNNETTE KELLY 7037976600 2013-01-31 1 YVETTE WOODS P00364424 7032511000 2011 2016-02-25 16:41:14Z LYNNETTE KELLY 1900 DUKE STREET ALEXANDRIA VA 223143412 39892663 0 X WWW.MSRB.ORG X 1975 VA PROTECT INVESTORS AND MUNICIPAL ENTITIES BY PROMOTING A FAIR AND EFFICIENT MUNICIPAL MARKET. 21 21 119 0 0 0 30277882 35445924 3141462 4405387 87871 41352 0 0 33507215 39892663 0 0 0 0 13754600 13993705 0 0 0 12321279 12843007 26075879 26836712 7431336 13055951 36651410 50041243 3312474 3646681 33338936 46394562 X SEE SCHEDULE OTHE MISSION OF THE MSRB IS TO PROTECT INVESTORS, STATE AND LOCAL GOVERNMENT ISSUERS, OTHER MUNICIPAL ENTITIES, AND THE PUBLIC INTEREST BY PROMOTING A FAIR AND EFFICIENT MUNICIPAL MARKET THROUGH: 1. ESTABLISHING RULES FOR DEALERS AND MUNICIPAL ADVISORS; 2. COLLECTING AND DISSEMINATING MARKET INFORMATION, AND 3. ENGAGING IN MARKET LEADERSHIP, OUTREACH AND EDUCATION. 0 0 ESTABLISHING REGULATIONS FOR DEALERS AND MUNICIPAL ADVISORS: SEE SCHEDULE O ESTABLISHING REGULATIONS FOR DEALERS AND MUNICIPAL ADVISORS:THE MSRB WAS CREATED BY CONGRESS AND IS EMPOWERED TO REGULATE SECURITIES FIRMS, BANKS AND MUNICIPAL ADVISORS THAT ENGAGE IN MUNICIPAL SECURITIES AND MUNICIPAL ADVISORY ACTIVITIES (COLLECTIVELY "REGULATED ENTITIES") WITH THE GOAL OF PROTECTING INVESTORS, MUNICIPAL ENTITIES, OBLIGATED PERSONS AND THE PUBLIC INTEREST. MSRB RULES SEEK TO PREVENT MANIPULATION AND FRAUD IN THE MUNICIPAL MARKET, PROMOTE FAIR, SAFE AND EFFICIENT TRANSACTIONS, AND SUPPORT A FREE AND OPEN MARKET IN MUNICIPAL SECURITIES AND MUNICIPAL FINANCIAL PRODUCTS. MSRB RULES ARE DEVELOPED WITH EXTENSIVE INPUT FROM THE PUBLIC AND MARKET STAKEHOLDERS INCLUDING ISSUERS, INVESTORS, DEALERS, ADVISORS, AND OTHERS, AND MUST BE APPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (SEC) PRIOR TO EFFECTIVENESS. IN ADDITION, THE MSRB'S ACTIVITIES ARE SUBJECT TO THE GENERAL OVERSIGHT OF THE SEC. THE MSRB FOLLOWS ESTABLISHED PROCEDURES FOR COORDINATING COOPERATIVELY WITH ENFORCEMENT AGENCIES CHARGED WITH ENFORCING MSRB RULES. THE MSRB ALSO HAS ESTABLISHED PROGRAMS IN CONNECTION WITH THE QUALIFICATION OF PROFESSIONALS EMPLOYED BY REGULATED ENTITIES.INFORMATION REGARDING THE MSRB'S RULES AND OTHER IMPORTANT INFORMATION OR DEVELOPMENTS WITH AN IMPACT ON THE PROTECTION OF INVESTORS, MUNICIPAL ENTITIES AND OBLIGATED PERSONS IS DISPLAYED ON THE MSRB'S CORPORATE WEBSITE, AT WWW.MSRB.ORG.DURING FY 2012, REGULATORY HIGHLIGHTS INCLUDE: - MSRB RULE G-17: EXPANDED THE DUTIES OF UNDERWRITERS TO STATE AND LOCAL GOVERNMENT ISSUERS;- MSRB RULE G-23: REVISED RULE CONCERNING THE ACTIVITIES OF FINANCIAL ADVISORS TO MINIMIZE CONFLICTS OF INTERESTS;- MSRB RULE G-3: CREATED NEW CATEGORY OF REGISTERED MUNICIPAL SECURITIES REPRESENTATIVE;- MSRB RULE G-14: AMENDED THE MSRB'S REAL-TIME TRANSACTION REPORTING SYSTEM TO ENHANCE LARGE TRADE PRICE TRANSPARENCY;- MSRB RULE G-16 AND G-9: AMENDED RULES TO FACILITATE THE ESTABLISHMENT OF A RISK-BASED COMPLIANCE EXAMINATION PROGRAM FOR BROKERS, DEALERS AND MUNICIPAL SECURITIES DEALERS;- MSRB RULE G-43: CREATED NEW REGULATIONS FOR THE ACTIVITIES OF BROKER'S BROKERS AND THE DEALERS THAT USE THEIR SERVICES;- MSRB RULES G-13, G-17, G-18 AND G-19: REVISED DEFINITION OF THE TERM "SOPHISTICATED MUNICIPAL MARKET PROFESSIONAL"; AND,- MSRB RULE G-34: ADOPTED PROHIBITION ON THE USE OF "NOT REOFFERED" DESIGNATION WITHOUT ALSO INCLUDING PRICE OR YIELD INFORMATION. COLLECTION AND DISSEMINATING MARKET INFORMATION: SEE SCHEDULE O COLLECTION AND DISSEMINATING MARKET INFORMATION: IN ORDER TO ACHIEVE ITS EXEMPT PURPOSE, THE MSRB COLLECTS MUNICIPAL MARKET DOCUMENTS AND DATA (COLLECTIVELY "INFORMATION") FROM REGULATED ENTITIES, MUNICIPAL ENTITIES, OBLIGATED PERSONS, AND/OR THEIR AGENTS AND MAKES THE INFORMATION WIDELY AVAILABLE. MSRB'S COLLECTION OF INFORMATION SERVES A CRITICAL ROLE IN PRESERVING FAIRNESS AND EFFICIENCY OF THE MUNICIPAL MARKET. BY REDISSEMINATING THIS INFORMATION TO MUNICIPAL MARKET PARTICIPANTS, AND TO REGULATORS CHARGED WITH EXAMINING FOR COMPLIANCE WITH AND ENFORCING MSRB RULES, AND OTHER REGULATORY AND POLICYMAKING BODIES, THE MSRB ENSURES THAT THE MARKET OPERATES TRANSPARENTLY AND EFFICIENTLY.UNDER ITS RULEMAKING AUTHORITY, THE MSRB HAS ESTABLISHED "INFORMATION FACILITIES" THAT PROVIDE THE LEGAL FOUNDATION FOR THE COLLECTION AND DISSEMINATION OF MUNICIPAL MARKET INFORMATION. THESE FACILITIES PROVIDE THE MSRB WITH THE AUTHORITY TO COLLECT MUNICIPAL TRANSACTION PRICES (WITH RESPECT TO CUSTOMER AND INTER-DEALER TRANSACTIONS IN MUNICIPAL SECURITIES); OFFICIAL STATEMENTS, PRELIMINARY OFFICIAL STATEMENTS, AND ADVANCE REFUNDING DOCUMENTS (IN CONNECTION WITH NEW ISSUES OF MUNICIPAL SECURITIES); CONTINUING DISCLOSURE DOCUMENTS (IN CONNECTION WITH OUTSTANDING ISSUES OF MUNICIPAL SECURITIES); INTEREST RATE INFORMATION AND RELATED DOCUMENTATION FOR CERTAIN SHORT-TERM OBLIGATIONS (IN CONNECTION WITH OUTSTANDING VARIABLE RATE DEMAND OBLIGATIONS AND AUCTION RATE SECURITIES); AND INFORMATION REGARDING BUSINESS UNDERTAKEN BY, AND CERTAIN POLITICAL CONTRIBUTIONS MADE BY, BROKERS, DEALERS, AND MUNICIPAL SECURITIES DEALERS OR THEIR PROFESSIONALS AND CERTAIN RELATED POLITICAL ACTION COMMITTEES (IN CONNECTION WITH THE MSRB'S PAY-TO-PLAY RULE). THE MSRB PROVIDES MOST OF THIS INFORMATION TO THE PUBLIC, FREE OF CHARGE, ON ITS ELECTRONIC MUNICIPAL MARKET ACCESS (EMMA) WEBSITE AT EMMA.MSRB.ORG. INFORMATION ABOUT POLITICAL CONTRIBUTIONS IS CURRENTLY AVAILABLE FREE OF CHARGE ON WWW.MSRB.ORG. IN ADDITION, ACCESS TO MOST INFORMATION COLLECTED BY THE MSRB IS AVAILABLE TO SUBSCRIBERS THROUGH PAID AUTOMATED SUBSCRIPTION SERVICES. AS OF THE END OF FY 2012, THE MSRB OFFERED FIVE PRINCIPAL DATA PRODUCTS WITH APPROXIMATELY 100 ACTIVE SUBSCRIPTION AGREEMENTS.ENHANCEMENTS TO DATA COLLECTION AND INFORMATION PROVIDED BY THE MSRB DURING FY 2012 INCLUDE: - PROVIDED ON THE EMMA WEBSITE CURRENT CREDIT RATINGS FOR MUNICIPAL SECURITIES; - PROVIDED ON THE EMMA WEBSITE STATISTICAL DATA ON NEW ISSUES OF MUNICIPAL SECURITIES;- ENHANCED PRICE TRANSPARENCY FOR LARGE TRADES ON THE EMMA WEBSITE;- PROVIDED ON THE EMMA WEBSITE YIELD DATA ON INTER-DEALER MUNICIPAL TRADES;- ENCOURAGED ISSUERS TO VOLUNTARILY MAKE BANK LOAN FINANCING DOCUMENTS AVAILABLE ON THE EMMA WEBSITE;- PROVIDED NEW HISTORICAL SUBSCRIPTION PRODUCTS FOR MUNICIPAL SECURITIES DISCLOSURE DOCUMENTS AND DATA; AND,- MADE TRADE ALERTS AVAILABLE ON THE EMMA WEBSITE. ENGAGING IN MARKET LEADERSHIP, OUTREACH AND EDUCATION: SEE SCHEDULE OENGAGING IN MARKET LEADERSHIP, OUTREACH AND EDUCATION: THE MSRB ENGAGES MUNICIPAL MARKET PARTICIPANTS, REGULATORS AND POLICYMAKERS TO BUILD UNDERSTANDING OF THE MUNICIPAL MARKET AND TO PROMOTE PRACTICES AND POLICIES, AS WELL AS PROBLEM-SOLVING, THAT PROTECT INVESTORS, MUNICIPAL ENTITIES, OBLIGATED PERSONS AND THE PUBLIC INTEREST. THE MSRB ALSO ENGAGES IN EDUCATION AND OUTREACH ACTIVITIES TO SUPPORT THE UNDERSTANDING OF THE MUNICIPAL MARKET AND TO HELP FURTHER PROTECT INVESTORS, MUNICIPAL ENTITIES, OBLIGATED PERSONS AND THE PUBLIC INTEREST.DURING FYI 2012, HIGHLIGHTS IN THIS AREA INCLUDE:- SPONSORED THE SEMI-ANNUAL MSRB INDUSTRY ROUNDTABLE ENTITLED "STATE AND LOCAL GOVERNMENTS CONFRONTING FISCAL DISTRESS: THE EFFECTS OF RECEIVERSHIPS, STATE TAKEOVERS AND CHAPTER 9 RESTRUCTURINGS ON THE MUNICIPAL MARKET," REINFORCING THE MSRB'S REPUTATION AS A FACILITATOR IN MARKET-WIDE DISCUSSIONS ABOUT IMPORTANT ISSUES;- SPONSORED A REGULATORY ROUNDTABLE ENTITLED "ENHANCING MUNICIPAL MARKET TRANSPARENCY," AT WHICH POLICYMAKERS AND REGULATORS PRESENTED THEIR PERSPECTIVES ON THE INCREASING IMPETUS TO FOCUS ON TRANSPARENCY IN THE MUNICIPAL MARKET;- SUPPORTED EFFORTS BY AN INDUSTRY WORKING GROUP TO PREPARE A "CONSIDERATIONS" DOCUMENT ON THE UTILIZATION OF BANK LOANS IN THE MUNICIPAL MARKET;- PARTICIPATED IN TWO EDUCATIONAL SEMINARS FOR JOURNALISTS IN CONJUNCTION WITH THE SOCIETY OF BUSINESS EDITORS AND REPORTERS AND THE REYNOLDS CENTER FOR BUSINESS JOURNALISM TO ENHANCE JOURNALISTS' AWARENESS OF THE MSRB AND INCREASE UNDERSTANDING OF THE EMMA WEBSITE;- PUBLISHED AN ELECTRONIC "MSRB INVESTOR TOOLKIT" TO HELP MUNICIPAL BOND INVESTORS NAVIGATE THE MARKET AND MAKE DECISIONS ABOUT MUNICIPAL BONDS;- PUBLISHED AN ELECTRONIC "MSRB STATE AND LOCAL GOVERNMENT TOOLKIT" TO HELP MUNICIPAL BOND ISSUERS BETTER UNDERSTAND THE BOND ISSUANCE PROCESS AND THE EMMA WEBSITE;- HOSTED FREE, PUBLIC WEBINARS ON NEW MSRB RULES AND MARKET TRANSPARENCY INITIATIVES; AND,- TESTIFIED IN A HEARING BEFORE THE HOUSE FINANCIAL SERVICES SUBCOMMITTEE ON CAPITAL MARKETS AND GOVERNMENT SPONSORED ENTERPRISES ON THE IMPACT OF THE DODD-FRANK ACT ON MUNICIPAL FINANCE, WHICH HELPED EDUCATE COMMITTEE MEMBERS ABOUT THE ROLE OF MUNICIPAL ADVISORS AND OTHER PARTICIPANTS IN MUNICIPAL FINANCE DEALS. 0 0 0 1 0 0 0 0 0 1 0 0 0 1 1 1 0 0 0 0 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1 38 0 1 119 1 0 0 0 0 0 0 0 X 21 21 0 0 1 0 0 0 1 1 1 0 0 1 1 1 1 1 1 1 0 0 X X BONNIE MOYNIHAN 7037976600 1900 DUKE STREET SUITE 600 ALEXANDRIA VA 223143412 MICHAEL G BARTOLOTTA 10.00 X 80000 0 0 MILROY A ALEXANDER 5.00 X 46100 0 0 SHERYL D BAILEY 5.00 X 46100 0 0 ROBERT A FIPPENGER 5.00 X 46100 0 0 JAY M GOLDSTONE 5.00 X 46100 0 0 DAVID J MADIGAN 5.00 X 46100 0 0 KATHLEEN A MCDONOUGH 5.00 X 51100 0 0 MARK G MULLER 5.00 X 50300 0 0 JOHN E PETERSON 5.00 X 32210 0 0 BENJAMIN S THOMPSON 5.00 X 46100 0 0 C CHRISTOPHER TROWER 5.00 X 46100 0 0 KEVIN L WILLENS 5.00 X 50000 0 0 ADELA CEPEDA 5.00 X 46100 0 0 ROBERT A LAMB 5.00 X X 46100 0 0 NOREEN P WHITE 5.00 X 51100 0 0 STEPHEN E HEANEY 5.00 X 45000 0 0 ALAN D POLSKY 7.00 X X 51100 0 0 DALL FORSYTHE 5.00 X 0 0 0 PETER J TAYLOR 5.00 X 0 0 0 JOSEPH J GERACI 5.00 X 0 0 0 DANIEL HEIMOWITZ 5.00 X 0 0 0 EDWARD DE LA ROSA 5.00 X 0 0 0 LYNNETTE KELLY 40.00 X 882615 0 93348 RONALD W SMITH 40.00 X 175022 0 30475 AMYTIS G RAMOS 40.00 X 69488 0 41457 ELIZABETH A WOLFE 40.00 X 295152 0 39369 SARA MAJROH 40.00 X 89145 0 16926 HAROLD L JOHNSON JR 40.00 X 502308 0 20868 ERNESTO A LANZA 40.00 X 463702 0 35083 JANET EAKES 40.00 X 262496 0 46252 ALAN MORISATO 40.00 X 259429 0 23434 MARGARET HENRY 40.00 X 315751 0 37083 LAWRENCE P SANDOR 40.00 X 270662 0 24428 KAREN DUBRUL 40.00 X 240869 0 35050 LESLIE CAREY 40.00 X 232211 0 35587 KATHLEEN MILES 40.00 X 224900 0 23142 JENNIFER A GALLOWAY 40.00 X 178316 0 34342 JOHH W YOUNG 4.00 X 56100 0 0 FRANK THOMAS HOWARD 4.00 X 45000 0 0 MARTIN H VOGTSBERGER 4.00 X 51100 0 0 STANLEY E GRAYSON 4.00 X 46100 0 0 5486076 0 536844 31 1 1 0 C C PACE SYSTEMS INC 4100 MONUMENT CORNER DRIVE SUITE 4 FAIRFAX VA 22030 SOFTWARE DEVELOPMENT 1779050 HBW GROUP 1055 FIRST STREET SUITE 200 ROCKVILLE MD 20850 GENERAL CONTRACTOR 329254 SUTHERLAND GLOBAL SERVICES 1160 PITTSFORD-VICTOR ROAD PITTSFORD NY 14534 CALL CENTER 298446 ABS CONSULTING 5527 SULLY LAKE DRIVE CENTREVILLE VA 20120 SOFTWARE DEVELOPMENT 163000 4 35445924 35445924 RULE VIOLATION REVENUE 900099 2771735 2771735 DATA SUBSCRIPTIONS 900099 1481011 1481011 PROF QUAL EXAM FEES 900099 141840 141840 OTHER 900099 10801 10801 4405387 41352 41352 39892663 4405387 0 41352 4076612 7826198 509638 935870 645387 88459 160464 1657790 501491 1034737 2228828 506539 317492 772 4343818 180280 ELECTRONIC INFO FEE 1094081 TEMP AGENCY STAFF 277272 MSRB PUBLICATIONS 86815 DUES, REGIST. & TRAININ 81802 282367 26836712 2810344 2646902 121619 38785 6247626 8087805 440613 393609 26566183 20153777 7710858 6412406 19320350 32461736 36651410 50041243 1610207 2081436 1702267 1565245 3312474 3646681 X 33338936 46394562 0 0 33338936 46394562 36651410 50041243 X 13055951 -325 X 0 1 1 X 0 0 0 0 35445924 1725 1725 1725 1845584 1066953 778631 2445996 1802950 643046 22274603 17283874 4990729 6412406 DEFERRED RENT 1387313 DEFERRED COMPENSATION 177932 1565245 39892663 26836712 13055951 -325 -325 13055626 39892338 -325 -325 39892663 0 39892663 26836712 0 26836712 0 26836712 PART X, LINE 2: THE MSRB IS EXEMPT FROM FEDERAL AND STATE TAXES ON INCOME (OTHER THAN UNRELATED BUSINESS INCOME) UNDER SECTION 501(C)(6) OF THE INTERNAL REVENUE CODE AND APPLICABLE INCOME TAX REGULATIONS OF THE COMMONWEALTH OF VIRGINIA. NO PROVISION FOR INCOME TAXES HAS BEEN MADE AS OF SEPTEMBER 30, 2012. THE MSRB ADDRESSES UNCERTAIN TAX POSITIONS IN ACCORDANCE WITH ASC TOPIC 740, INCOME TAXES, WHICH PROVIDES GUIDANCE FOR HOW UNCERTAIN TAX POSITIONS SHOULD BE RECOGNIZED, MEASURED, PRESENTED AND DISCLOSED IN FINANCIAL STATEMENTS. DURING THE YEARS FROM 2009 TO 2012, WHICH REPRESENT THE YEARS MANAGEMENT CONSIDERS TO BE OPEN FOR EXAMINATION BY TAXING AUTHORITIES, MANAGEMENT DID NOT IDENTIFY THE EXISTENCE OF ANY UNCERTAIN TAX POSITION. X 1 1 X X X X X X 1 1 0 LYNNETTE KELLY 618883 0 50000 0 213732 0 72050 0 21298 0 975963 0 105000 0 RONALD W SMITH 174228 0 0 0 794 0 19651 0 10824 0 205497 0 0 0 ELIZABETH A WOLFE 293910 0 0 0 1242 0 20438 0 18931 0 334521 0 0 0 HAROLD L JOHNSON JR 101192 0 0 0 401116 0 15833 0 5035 0 523176 0 0 0 ERNESTO A LANZA 462403 0 0 0 1299 0 29400 0 5683 0 498785 0 0 0 JANET EAKES 260018 0 0 0 2478 0 22050 0 24202 0 308748 0 0 0 ALAN MORISATO 258277 0 0 0 1152 0 20882 0 2552 0 282863 0 0 0 MARGARET HENRY 312004 0 0 0 3747 0 21574 0 15509 0 352834 0 0 0 LAWRENCE P SANDOR 269852 0 0 0 810 0 21248 0 3180 0 295090 0 0 0 KAREN DUBRUL 237445 0 0 0 3424 0 19477 0 15573 0 275919 0 0 0 LESLIE CAREY 231709 0 0 0 502 0 20511 0 15076 0 267798 0 0 0 KATHLEEN MILES 223840 0 0 0 1060 0 14077 0 9065 0 248042 0 0 0 JENNIFER A GALLOWAY 177756 0 0 0 560 0 16111 0 18231 0 212658 0 0 0 JOHH W YOUNG 56100 0 0 0 0 0 0 0 0 0 56100 0 0 0 FRANK THOMAS HOWARD 45000 0 0 0 0 0 0 0 0 0 45000 0 0 0 MARTIN H VOGTSBERGER 51100 0 0 0 0 0 0 0 0 0 51100 0 0 0 STANLEY E GRAYSON 46100 0 0 0 0 0 0 0 0 0 46100 0 0 0 PART I, LINE 1A THE MSRB REIMBURSES BOARD MEMBERS AND THE EXECUTIVE DIRECTOR FOR THE COST OF COACH CLASS AIR TRAVEL FOR FLIGHTS OF 3 HOURS OR LESS IN TOTAL ONE-WAY TRIP DURATION. FOR AIR TRAVEL MORE THAN 3 HOURS IN TOTAL ONE-WAY TRIP DURATION, THE MSRB REIMBURSES BOARD MEMBERS AND THE EXECUTIVE DIRECTOR FOR THE USE OF BUSINESS CLASS WHEN AVAILABLE, OR IF ONLY TWO CLASSES OF SERVICE ARE OFFERED, FIRST CLASS. BOARD MEMBERS AND THE EXECUTIVE DIRECTOR ARE REIMBURSED THE COSTS OF BUSINESS CLASS RAIL FARES. THE MSRB HAS DETERMINED THIS MEETS THE BUSINESS REQUIREMENT STANDARD FOR NOT TREATING THE BENEFIT AS COMPENSATORY ON THE FORM W-2 OR 1099. PART I, LINES 4A-B SEVERENCE PAYMENT: HAROLD L. JOHNSON, JR. $398,626 PART I, LINES 4A-B LYNNETTE KELLY PARTICIPATED IN A 457(F) SUPPLEMENTAL NONQUALIFIED RETIREMENT PLAN. A DISTRIBUTION OF $126,312 WAS MADE DURING THE YEAR. FORM 990, PART VI, SECTION A, LINE 4 THE DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT, PUB. L. NO. 111-203, SECTION. 975, 124 STAT. 1376 (2010) (THE "DODD-FRANK ACT"), WAS ENACTED IN JULY 2010 AND, IN PART, AMENDED SECTION 15B OF THE SECURITIES EXCHANGE ACT OF 1934, 15 U.S.C. SECTION. 78O-4, UNDER WHICH THE MSRB WAS ORIGINALLY CREATED IN 1975 AND WHICH GOVERNS THE ACTIVITIES OF THE MSRB. THE DODD-FRANK ACT EXPANDED THE MISSION AND RULEMAKING AUTHORITY OF THE ORGANIZATION AND CONTAINED VARIOUS PROVISIONS THAT AFFECTED THE GOVERNANCE AND MANDATE OF THE ORGANIZATION. IN PARTICULAR, THE DODD-FRANK ACT CHANGED THE COMPOSITION OF THE MSRB'S BOARD OF DIRECTORS, EFFECTIVE FOR THE FISCAL YEARS BEGINNING OCTOBER 1, 2010 AND THEREAFTER, TO CONSIST OF A MAJORITY OF PUBLIC MEMBERS AND TO INCLUDE REPRESENTATION OF MUNICIPAL ADVISORS, IN ADDITION TO EXISTING REPRESENTATION OF BROKER-DEALERS AND BANK DEALERS. THE MSRB AMENDED AND FILED ITS ARTICLES OF INCORPORATION EFFECTIVE OCTOBER 1, 2011 TO REFLECT FINAL CHANGES IN THE BOARD OF DIRECTORS' STRUCTURE AS REQUIRED BY THE DODD-FRANK ACT BY RETAINING THE BOARD OF DIRECTORS SIZE AT 21 MEMBERS AND DIVIDING BOARD MEMBERS INTO THREE CLASSES, EACH CLASS COMPOSED OF SEVEN MEMBERS WHO WILL SERVE THREE-YEAR, STAGGERED TERMS. FORM 990, PART VI, SECTION A, LINE 7B ALL PROPOSED RULE CHANGES ADOPTED BY THE BOARD OF DIRECTORS OF THE MSRB ARE SUBJECT TO THE FILING AND APPROVAL OR REVIEW REQUIREMENTS BY THE SECURITIES AND EXCHANGE COMMISSION UNDER SECTION 19(B) OF THE SECURITIES EXCHANGE ACT OF 1934. FORM 990, PART VI, SECTION B, LINE 11 THE BOARD OF DIRECTORS OF THE MSRB HAS AN AUDIT COMMITTEE THAT IS CHARGED WITH REVIEWING WITH MANAGEMENT THE ORGANIZATION'S COMPLETED FORM ANNUALLY PRIOR TO THE FILING OF SUCH FORM AND REPORTING ANY FINDINGS OR CONCLUSIONS TO THE BOARD OF DIRECTORS IN CONNECTION WITH THE BOARD'S REVIEW OF SUCH FORM. THE AUDIT COMMITTEE CONDUCTED ITS REVIEW ON 01/23/2013 AND THE BOARD OF DIRECTORS CONDUCTED ITS REVIEW ON 01/24/2013. FORM 990, PART VI, SECTION B, LINE 12C THE MSRB MAINTAINS FOR ITS BOARD OF DIRECTORS AND ITS STAFF: A CODE OF ETHICS AND BUSINESS CONDUCT POLICY; A CONFLICTS OF INTEREST POLICY; AND, A WHISTLEBLOWER POLICY WITH COMPLAINT HANDLING PROCEDURES. ALL BOARD MEMBERS AND STAFF ARE TRAINED ANNUALLY ON THESE POLICIES AND MUST SIGN AN ACKNOWLEDGMENT. THE MSRB HAS A POLICY REQUIRING THAT OFFICERS, DIRECTORS AND KEY EMPLOYEES DISCLOSE ANNUALLY INTERESTS THAT COULD GIVE RISE TO CONFLICTS. IN CONNECTION WITH THE ELECTION OF NEW MEMBERS OF THE BOARD OF DIRECTORS, EACH CANDIDATE PROVIDES INFORMATION TO THE MSRB CONCERNING POTENTIAL CONFLICTS OF INTEREST. IN ADDITION, CERTAIN ORGANIZATIONAL CONFLICTS ARE EFFECTIVELY PROHIBITED UNDER SECTION 15B(B) OF THE SECURITIES EXCHANGE ACT OF 1934 DUE TO THE STATUTORY REQUIREMENTS REGARDING QUALIFICATION FOR MEMBERSHIP ON THE BOARD OF DIRECTORS. IN PARTICULAR, PUBLIC REPRESENTATIVES MUST BE INDEPENDENT OF ANY MUNICIPAL SECURITIES BROKER, MUNICIPAL SECURITIES DEALER OR MUNICIPAL ADVISOR. MSRB RULE A-3 DEFINES "INDEPENDENT" AS HAVING NO MATERIAL BUSINESS RELATIONSHIP WITH ANY MUNICIPAL SECURITIES BROKER, MUNICIPAL SECURITIES DEALER OR MUNICIPAL ADVISOR, INCLUDING AT A MINIMUM NOT CURRENTLY OR AT ANY TIME WITHIN THE LAST TWO YEARS BEING ASSOCIATED WITH A MUNICIPAL SECURITIES BROKER, MUNICIPAL SECURITIES DEALER OR MUNICIPAL ADVISOR AND NOT HAVING A RELATIONSHIP WITH ANY MUNICIPAL SECURITIES BROKER, MUNICIPAL SECURITIES DEALER OR MUNICIPAL ADVISOR, WHETHER COMPENSATORY OR OTHERWISE, THAT REASONABLY COULD AFFECT THE INDEPENDENT JUDGMENT OR DECISION MAKING OF THE INDIVIDUAL. THE MSRB'S GENERAL COUNSEL REVIEWS THE CONFLICTS OF INTEREST ACKNOWLEDGEMENT AND DISCLOSURE FORMS AND DETERMINES WHAT ACTIONS, IF ANY, NEED TO BE TAKEN, INCLUDING ASKING A BOARD MEMBER TO RECUSE HIM OR HERSELF FROM DELIBERATIONS OR VOTING ON AN ACTION. FORM 990, PART VI, SECTION B, LINE 15A UNDER THE MSRB WRITTEN COMPENSATION STRATEGY AND PROGRAM, THE FINANCE COMMITTEE (COMPRISED OF MEMBERS OF THE BOARD OF DIRECTORS) IS RESPONSIBLE FOR MAKING RECOMMENDATIONS AND THE BOARD OF DIRECTORS IS RESPONSIBLE FOR APPROVING THE ORGANIZATION-WIDE COMPENSATION STRATEGY. THE ANNUAL SALARY BUDGET IS APPROVED BY THE BOARD OF DIRECTORS. AT LEAST ONCE EVERY FOUR YEARS, THE COMPENSATION STRATEGY AND STRUCTURE ARE REVIEWED AND APPROVED BY THE FINANCE COMMITTEE BASED ON INFORMATION RECEIVED FROM AN EXTERNAL SALARY CONSULTANT. THE EXTERNAL SALARY CONSULTANT COMPARES THE MSRB WITH COMPARABLE PEER ORGANIZATIONS IN THE LOCAL GEOGRAPHIC MARKET AND WITHIN THE INDUSTRY AS APPROPRIATE. THE FULL BOARD APPROVES THE COMPENSATION OF THE EXECUTIVE DIRECTOR, AND THE EXECUTIVE DIRECTOR ESTABLISHES THE COMPENSATION OF THE KEY EMPLOYEES WITHIN THE PARAMETERS AND PHILOSOPHY OF THE APPROVED COMPENSATION STRATEGY. ADDITIONALLY, THE EXECUTIVE DIRECTOR ANNUALLY PROVIDES TO THE BOARD THE SALARY, BENEFITS, AND TOTAL COMPENSATION OF THE SENIOR MANAGEMENT. FORM 990, PART VI, SECTION C, LINE 19 THE ORGANIZATION'S WEBSITE (WWW.MSRB.ORG) CONTAINS THE FOLLOWING: SECURITIES EXCHANGE ACT SECTION 15B (ESTABLISHING STATUTE), RESTATED ARTICLES OF INCORPORATION, BY-LAWS, GOVERNANCE-RELATED ADMINISTRATIVE RULES, BOARD COMMITTEE CHARTERS, CODE OF ETHICS AND BUSINESS CONDUCT, CONFLICTS OF INTEREST POLICY AND DISCLOSURE FORM, WHISTLEBLOWER POLICY, FINANCIAL STATEMENTS, THE IRS FORM 990, CERTAIN FINANCIAL POLICIES AND OTHER GOVERNANCE-RELATED POLICIES AND PROCEDURES. CHANGES IN NET ASSETS OR FUND BALANCES: FORM 990, PART XI, LINE 5: NET UNREALIZED LOSSES ON INVESTMENTS: -325. FORM 990, PART VI, SECTION A, LINE 2: NO OFFICER, DIRECTOR, TRUSTEE, OR KEY EMPLOYEE HAS A FAMILY RELATIONSHIP OR BUSINESS RELATIONSHIP (AS SUCH TERMS ARE DEFINED FOR PURPOSES OF FORM 990) WITH ANY OTHER OFFICER, DIRECTOR, TRUSTEE, OR KEY EMPLOYEE. AS CONTEMPLATED BY THE CONGRESSIONALLY MANDATED STRUCTURE OF THE MSRB'S BOARD OF DIRECTORS (WHICH SERVES AS THE ORGANIZATION'S GOVERNING BODY) AS A SELF-REGULATORY ORGANIZATION UNDER THE FEDERAL SECURITIES LAWS, THE EMPLOYERS OF SOME MEMBERS OF THE BOARD OF DIRECTORS, AND SUCH MEMBERS IN THEIR CAPACITIES AS EMPLOYEES OF THEIR EMPLOYERS, FROM TIME TO TIME TRANSACT BUSINESS WITH ONE ANOTHER IN THE ORDINARY COURSE OF THEIR BUSINESS AS PARTICIPANTS IN THE MUNICIPAL MARKET ON THE SAME TERMS AS ARE GENERALLY OFFERED TO OTHERS IN THE SAME LINE OF BUSINESS.