2011-02-02T14:17:40-06:00 2010-09-30 Grant Thornton LLP 2010 CORPORATE RIDGE SUITE 400 MCLEAN VA 22102 990 2009-10-01 521042433 MUNICIPAL SECURITIES RULEMAKING BOARD MUNI 7037976600 1900 DUKE STREET ALEXANDRIA VA 223143412 LYNNETTE KELLY HOTCHKISS 7037976600 2011-02-02 true 7038477500 2009 2016-02-24 21:20:13Z LYNNETTE KELLY HOTCHKISS 1900 DUKE STREET ALEXANDRIA VA 223143412 22892379 false X WWW.MSRB.ORG X 1975 VA SEE SCHEDULE O 15 15 99 0 0 0 18619657 21944152 441392 643379 655439 304848 27511 0 19743999 22892379 0 0 0 0 10419956 11405827 0 0 0 10861304 11725581 21281260 23131408 -1537261 -239029 30777664 29760889 4391176 3825563 26386488 25935326 SEE SCHEDULE O false true SEE SCHEDULE O SEE SCHEDULE O SEE SCHEDULE O false false false true false false false false false true true false false false false false false false false false false false false true false false false false false false false false false false false false false false true 36 0 true 99 true false false false false false 15 15 false false true false false false true true true false false true true true true true true true true false X RONALD W SMITH 7037976600 1900 DUKE STREET STE 600 ALEXANDRIA VA 223143412 PETER CLARKE 5.0 X X 60000 0 0 DONALD O'BRIEN 1.0 X 8610 0 0 DAVID LIPTON 3.0 X 45000 0 0 ALAN MURPHY 4.0 X X 50000 0 0 TERRY AGRISS 4.0 X 50000 0 0 KEVIN WILLENS 1.0 X 0 0 0 MICHAEL BARTOLOTTA 2.0 X 11250 0 0 STAN GRAYSON 3.0 X 45000 0 0 F THOMAS HOWARD 3.0 X 45000 0 0 KATLEEN A MCDONOUGH 3.0 X 45000 0 0 MARTIN H VOGTSBERGER 3.0 X 45000 0 0 JOHN W YOUNG 3.0 X 31411 0 0 MARK MULLER 1.0 X 0 0 0 STEPHEN E HEANEY 1.0 X 0 0 0 ALAN POLSKY 1.0 X 0 0 0 RONALD W SMITH 40.0 X 164322 0 27413 MELANIE S RICHARDSON 40.0 X 185121 0 48290 AMYTIS G RAMOS 40.0 X 3366 0 373 LYNNETTE KELLY HOTCHKISS 40.0 X 567420 0 81010 HAROLD L JOHNSON JR 40.0 X 475200 0 42766 ERNESTO A LANZA 40.0 X 425889 0 37194 JANET EAKES 40.0 X 391768 0 48534 LAWRENCE SANDOR 40.0 X 253588 0 28234 MARGARET HENRY 40.0 X 243572 0 25017 LESLIE CAREY 40.0 X 227185 0 30185 JOHN DOYLE 40.0 X 210880 0 43480 ALAN J MORISATO 40.0 X 197610 0 27126 STEVE WOOL 3.0 X 37911 0 0 JAMES POSTHAUER 4.0 X 50000 0 0 MICHAEL IMHOFF 4.0 X 50000 0 0 MAUD DAUDON 4.0 X 50000 0 0 RONALD STACK 6.0 X 75000 0 0 ROBERT ZUBAK 4.0 X 50000 0 0 PATRICIA HARDY LAGRONE 40.0 X 153283 0 14567 4248386 0 454189 22 true true false SEE SCHEDULE O 9 21944152 21944152 SUBSCRIPTION FEES 900099 533547 533547 PUBLICATIONS 900099 10512 10512 PROF QUAL EXAM FEES 900099 92220 92220 OTHER 900099 7100 7100 643379 304848 304848 0 0 0 0 0 0 0 22892379 643379 304848 0 0 0 0 3491763 0 6000716 486977 960258 466113 0 18987 192756 0 0 0 2560862 0 600883 489904 0 2299284 443628 0 183219 5771 0 3252682 0 ELECTRONIC INFO. SERVICES 1146424 TEMP. CLERICAL ASSISTANCE 192252 MSRB PUBLICATIONS 92945 SUBSCRIPTIONS/PUBLICATIONS 25200 DUES, REGSTRN & TRAINING 94993 125791 23131408 1474170 1736866 3687655 3927581 159168 203424 20368734 12782422 7023931 7586312 18244014 16228328 188726 78378 30777664 29760889 2064341 1824503 97629 0 2229206 2001060 4391176 3825563 X 26386489 25935326 26386489 25935326 30777664 29760889 X false true true X false false false false 21944152 38911 38911 38911 1421356 796229 625127 17528563 10666911 6861652 1418815 1319282 99533 7586312 0 SEVERANCE LIABILITY 71829 DEFERRED RENT 1814979 DEFERRED COMPENSATION 114252 2001060 22892379 23131408 -239029 -212133 -212133 -451162 22680246 -212133 -212133 22892379 22892379 23131408 23131408 23131408 PART X, LINE 2 FIN 48 FOOTNOTE TO FINANCIAL STATEMENTS EFFECTIVE SEPTEMBER 30, 2010, MSRB ADOPTED A NEW GUIDANCE THAT CREATES A SINGLE MODEL TO ADDRESS UNCERTAINTY IN TAX POSITIONS AND CLARIFIED THE ACCOUNTING FOR INCOME TAXES BY PRESCRIBING THE MINIMUM RECOGNITION THRESHOLD A TAX POSITION IS REQUIRED TO MEET BEFORE BEING RECOGNIZED IN ITS FINANCIAL STATEMENTS. UNDER THE REQUIREMENTS OF THIS GUIDANCE, ORGANIZATIONS COULD NOW BE REQUIRED TO RECORD AN OBLIGATION AS THE RESULT OF TAX POSITIONS THEY HAVE HISTORICALLY TAKEN ON VARIOUS TAX EXPOSURE ITEMS. THE IMPACT OF THE ADOPTION OF THIS GUIDANCE DID NOT HAVE A MATERIAL EFFECT ON THE FINANCIAL STATEMENTS OF MSRB. PRIOR TO THE ADOPTION OF THIS GUIDANCE, THE DETERMINATION OF WHEN TO RECORD A LIABILITY FOR A TAX EXPOSURE WAS BASED ON WHETHER A LIABILITY WAS CONSIDERED PROBABLE AND REASONABLY ESTIMABLE IN ACCORDANCE WITH GUIDANCE CONCERNING RECORDING OF CONTINGENCIES. X X true true X X X X X X true true false RONALD W SMITH 164322 0 0 0 0 0 18658 0 8755 0 191735 0 0 0 MELANIE S RICHARDSON 185121 0 0 0 0 0 21806 0 26484 0 233411 0 0 0 PATRICIA HARDY LAGRONE 153283 0 0 0 0 0 7405 0 7162 0 167850 0 0 0 STEVE WOOL 37911 0 0 0 0 0 0 0 0 0 37911 0 0 0 JAMES POSTHAUER 50000 0 0 0 0 0 0 0 0 0 50000 0 0 0 MICHAEL IMHOFF 50000 0 0 0 0 0 0 0 0 0 50000 0 0 0 MAUD DAUDON 50000 0 0 0 0 0 0 0 0 0 50000 0 0 0 RONALD STACK 75000 0 0 0 0 0 0 0 0 0 75000 0 0 0 ROBERT ZUBAK 50000 0 0 0 0 0 0 0 0 0 50000 0 0 0 HAROLD L JOHNSON JR 475200 0 0 0 0 0 27600 0 15166 0 517966 0 0 0 ERNESTO A LANZA 425889 0 0 0 0 0 27600 0 9594 0 463083 0 0 0 JANET EAKES 391768 0 0 0 0 0 20700 0 27834 0 440302 0 0 0 LAWRENCE SANDOR 253588 0 0 0 0 0 18640 0 9594 0 281822 0 0 0 MARGARET HENRY 243572 0 0 0 0 0 16762 0 8255 0 268589 0 0 0 LESLIE CAREY 227185 0 0 0 0 0 20700 0 9485 0 257370 0 0 0 JOHN DOYLE 210880 0 0 0 0 0 17646 0 25834 0 254360 0 0 0 ALAN J MORISATO 170610 0 27000 0 0 0 12815 0 14311 0 224736 0 0 0 LYNNETTE KELLY HOTCHKISS 567420 0 0 0 0 0 55700 0 25310 0 648430 0 0 0 Part I (Question 1b) Provided Compensation Information The MSRB reimburses Board members and the Executive Director for the cost of business class rail fares and 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. MSRB provides a gross-up for staff for the value of group-term life insurance in excess of $50,000. Part I (Question 4A) Severance Payment Patricia Hardy Lagrone $82,992 PART I (QUESTION 4B) Supplemental Nonqualified Retirement Plan Lynnette K. Hotchkiss $35,000 Form 990, Part I and III (Question 1) Organization's Mission The Mission of the Municipal Securities Rulemaking Board (MSRB) is to protect investors, municipal entities and the public interest in a fair and efficient market for municipal securities through: (1) Establishment of rules for dealers and municipal advisors; (2) Collection and dissemination of market information; and, (3) Education, outreach and market leadership. Form 990, Part III (Question 3) Significant Changes to Program Services In June 2010, the MSRB terminated its public access facility that provided access to printed copies of official statements, advance refunding and other documents made available by the MSRB to the public. All current information that was accessible to the public through the public access facility is now readily accessible through the MSRB website, www.msrb.org, or the Electronic Municipal Market Access ("EMMA") website, www.emma.msrb.org. Form 990, Part III (Question 4) Exempt Purpose Achievements Question 4a: Establishment of Rules The MSRB was created by Congress to adopt rules with respect to transactions in municipal securities effected by Brokers, Dealers and municipal Securities Dealers (Collectively, "Dealers"). The rules seek to prevent fraudulent and manipulative acts and practices; to promote just and equitable principles of trade; to foster cooperation and coordination with other regulators and marketplace entities engaged in the clearance, settlement and facilitation of transactions in municipal securities or in the processing of information in connection with such transactions; to remove impediments to and perfect the mechanism of a free and open market in municipal securities; and to protect investors and the public interest. Such rules must be approved by the Securities and Exchange Commission (SEC) prior to effectiveness, and the MSRB's activities are subject to the general oversight of the SEC. The MSRB's funding is provided primarily by dues and assessments placed by the MSRB on Dealers, which funds are used in support of the MSRB's rulemaking activities and such other activities in support of its mission, and is supplemented by charges in connection with certain automated subscription services. The MSRB also has established programs in connection with: the qualification of professionals employed by dealers; outreach, education and market leadership with respect to the MSRB's rules and market information programs, as well as with respect to other important information or developments having an impact on investor protection or otherwise affecting the municipal securities market; research, providing statistical and other data based on the information collected by the MSRB or other market information sources; and regulatory cooperation and coordination with the relevant enforcement agencies charged with examining for compliance with and enforcing MSRB rules. Beginning on October 1, 2010, the MSRB was granted rulemaking authority over municipal advisors and also was charged with protecting municipal entities and obligated persons. Question 4b: Collection of Information In order to achieve its exempt purpose, the MSRB collects information from dealers, issuers, obligated persons, and/or their agents. The MSRB has established under its rulemaking authority information facilities that support disclosure and transparency by the municipal market participants. The MSRB market information programs provide critical information to the municipal securities market, to regulators charged with examining for compliance with and enforcing MSRB rules, and to other regulatory and policymaking bodies through the collection of documents and/or data (collectively, "information") from dealers, issuers, obligated persons, and/or their agents, and the re-dissemination of such information, as described below. The MSRB collects information regarding: 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); Short-Term Interest Rate Information (the MSRB collects such information and related data with respect to municipal securities bearing interest at rates that change from time to time); and political contribution data (concerning political contributions of dealers, and of certain of their municipal securities personnel and political action committees, together with information on certain new issue municipal securities activities of dealers). The MSRB provides public access to the information through the internet and most of this information currently is or will be available to subscribers through automated subscription services. Question 4c: Providing Information Utilizing information collected, the MSRB's Market Information Programs provide critical information to the Municipal Securities Market, to regulators charged with examining for compliance with and enforcing MSRB rules, and to other regulatory and policymaking bodies. The MSRB makes the information noted above, together with certain other market information, educational materials and statistical data, available to the public through its electronic municipal market access (EMMA) web site at emma.msrb.org. Form 990, Part VI (Question 2) Family or Business Relationships 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. The employers of members of the governing body, 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 securities market on the same terms as are generally offered to others in the same line of business. Form 990, Part VI (Question 4) Change in Organizational Documents The Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 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. 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 affect the governance and mandate of the organization, effective on October 1, 2010, which coincides with the first day of the MSRB's 2011 fiscal year. The MSRB amended its Bylaws in September 2010 to reflect the change in composition of its 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, all as mandated by the Dodd-Frank Act. In addition, MSRB staff prepared amended Articles of Incorporation to reflect the expanded jurisdiction of the MSRB under the Dodd-Frank Act, which amended Articles of Incorporation were filed on the first day of the MSRB's 2011 fiscal year. The Articles of Incorporation now provide that Board members elected for fiscal year 2011 will have two year terms and all other Board members will have three year terms to reflect the new, expanded composition of the Board and the terms of office for Board members during a two-year transitional period. Finally, the changes to the Articles of Incorporation reflect the evolving role of the MSRB as a self-regulatory organization in providing education, outreach and market leadership regarding issues that impact the municipal securities market. Form 990, Part VI (Question 7b) Approval of Some Governing Body Decisions Certain decisions of the governing body are subject to approval by the Securities and Exchange Commission (SEC). All proposed rule changes of the MSRB are subject to approval by the SEC under Section 19(B) of the Securities Exchange Act of 1934. In addition, prior to October 1, 2010, public representatives elected to serve on the governing body are subject to the approval of the SEC under Section 15(B)(2)(B) of the Securities Exchange Act of 1934 to assure that no one of them is associated with any broker, dealer or municipal securities dealer(other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker or municipal securities dealer) and that at least one is representative of investors in municipal securities and at least one is representative of issuers of municipal securities. Form 990, Part VI (Question 11A) Review of Form 990 The governing body of the organization 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 governing body in connection with the governing body's review of such form. The Audit Committee conducted its review on 01/26/2011 and the governing body conducted its review on 01/27/2011. Form 990, Part VI (Question 12c) Conflict of Interest Policy The MSRB maintains a code of ethics and business conduct as well as a conflicts of interest policy. In connection with the election of new members of the governing body, 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 governing body. In particular, public representatives may not be associated with any broker, dealer or municipal securities dealer (other than by reason of being under common control with, or indirectly controlling, any broker or dealer which is not a municipal securities broker or municipal securities dealer). Additionally, Board members may not deliberate or vote on any matter before the board or one of its Committees in which the Board member's employer has a particular interest that may present a conflict. The MSRB also has a whistleblower policy with complaint handling procedures. The conflicts of interest and whistleblower policies, as well as the code of ethics and business conduct, are reviewed annually with officers, directors and key employees. All employees of the organization are trained annually on these policies and required to sign an acknowledgment. In addition, the MSRB has a policy requiring that officers, directors, trustees, and key employees disclose annually interests that could give rise to conflicts. Form 990, Part VI (Question 15a + 15b) Compensation Review and Approval Process Under the MSRB written compensation strategy and program, the compensation committee (comprised of members of the board) is responsible for making recommendations and the governing body is responsible for approving the organization wide compensation strategy. The annual salary budget, salary grades, and pay ranges are approved by the compensation committee based on information received from an external salary consultant. The external salary consultant compares our organization with comparable peer groups in our local geographic market and within the industry as appropriate. The full board approves the compensation of the Executive Director and Executive Director establishes the compensation of the key employees within the parameters and philosophy of the approved compensation strategy. Form 990, Part VI (Question 19) Governing Documents Available to the Public 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, and other governance-related policies and procedures. Form 990, Part VII, Section B Compensation of Five Highest Independent Contractors (1) CC Pace Systems, Inc. 4100 Monument Corner Drive Suite 400 Fairfax, VA 22030 software Development & Recruiting 2,951,206 (2) Accenture PO Box 70629 Chicago, IL 60673 Software Development 1,691,870 (3) Equaterra Dept 0100, PO Box 120110 Dallas, TX 75312 Project Management 377,007 (4) Navigation Arts 7901 Jones Branch Dr McLean, VA 22101 Software Development 227,132 (5) ABS Consulting 5527 Sully Lake Drive Centreville, VA 20120 Software Development 206,200 Total Compensation 5,453,415