The rr, who is entitled to vote in the election, does not make a contribution to the elected officials campaign, but does pay $300 of out of pocket expenses for the cost of the reception. municipal securities firm employing the MFP is banned for 2 years from engaging in municipal securities business with that issuer. The Official Statement is required to be delivered only to those customers who request one in writing. A. Because the MFP is prohibited from giving any dollar amount to an elected officials campaign, this will result in a banD. The Official Statement for a new municipal issue is not required under the Securities Act of 1933 since municipal issues are exempt, nor is it required to be prepared by issuers by the MSRB, since the MSRB has no authority over municipal issuers. Confirmation information that must be shown for municipal bonds traded at a discount or premium from par includes the yield at which the transaction was effected (which will differ from the stated rate of interest because the bonds were not traded at par) and the resulting dollar price; whether the securities are callable, with disclosure of in-whole call dates; the capacity in which the broker-dealer acted (either as agent or principal); and the total dollar amount of the transaction. Such relationships must be disclosed to customers. Because the contribution exceeds $250, the municipal securities firm will be subject to a 2-year ban on engaging in municipal securities business with that issuerC. Under MSRB rules, the principal must approve each new account; approve each municipal trade (this need not occur prior to the trade); handle the resolution of each customer complaint; and approve each mailing piece used to solicit business. covering delivery of disclosure documents on new issues (Official Statements)C. setting maximum mark-ups and commissionsD. If more than $250 is contributed, then that firm is banned from engaging in municipal securities business with that issuer for the next 2 years. A. broker-dealer against another broker-dealer. This is permitted under MSRB rules because the MFP is volunteering his time to the elected officials campaignB. The Official Statement is the disclosure document for new municipal issues prepared by the bond counsel - since it is lawyer prepared, there is no requirement for municipal principal approval of the document. Enforcement of regulations regarding trading of municipal securities, as they apply to firms that are members of FINRA, is performed by (the): The MSRB has no enforcement capability - it creates rules, leaving enforcement to the existing regulatory bodies. Municipal securities business includes acting as a financial advisor to that issuer or performing negotiated underwritings for that issuer. total dollar amount of the transactionD. This is prohibited under MSRB rules because the statement is materially untrueC. This action will result in a 2-year ban on the municipal broker-dealer conducting municipal securities business with that issuer because the amount exceeded $250B. Since this firm effects trades solely on an agency basis, it carries no inventory and is not a market maker. MSRB rules on new issue disclosure require that the spread be disclosed on negotiated offerings. municipal securities firm employing the MFP is banned for 2 years from engaging in municipal securities business with that issuer. The MSRB regulates the contents of confirmations to standardize information. MSRB Rule Book October 2019. Office of Comptroller of CurrencyB. This individual cannot be given the ticket because it is a conflict of interest. Which statement is TRUE? In competitive bid municipal underwritings, the offering price of each maturity must be disclosed, but there is not requirement to disclose the spread, which is typically very thin. Create your account View this answer Option D is not true among all so, it is the correct option. C) between member firms and members of the public. Under MSRB rules, all of the following are defined as advertisements EXCEPT: A. If a customer initiates a claim against a broker-dealer via the MSRBs arbitration procedure, then the matter must be resolved by arbitration (Choice II). The Official Statement is required by the MSRB and must be given to underwriters to satisfy their SEC due diligence requirements C. The Official Statement is required to be delivered to customers at, or prior to settlement, if availableD. MSRB rules require that if a customer requests, the dealer must disclose the order priority provisions on a new issue (the usual priority is Pre-Sale; Group Net; Designated; Member Takedown). A. Because he or she is out of office, the MFP can contribute any dollar amount to the clean-up campaign. If the bond is reoffered at 108, the dealer is taking an 8% mark-up. There is no spread disclosure on competitive bid offerings. Municipal sales personsB. A. The political contribution will result in a ban on the municipal securities firm performing negotiated underwritings for that issuer for 3 years, An MFP (Municipal Finance Professional) can give up to $250 to an elected officials campaign in which he or she is entitled to vote with no problems. An account registration that allows the customer to name the person into whose name securities in the account will be registered upon the death of the customer is known as: A. tenancy in common B. transfer on death C. joint tenants with rights of survivorship D. successor registration Expert Answer Top Expert 500+ questions answered Solution: The MSRB does not regulate View the full answer Transcribed image text: The MSRB does NOT regulate which of the following? A. act as a dealer, charging the customer a mark-up in the transaction. requested by underwriters to satisfy the disclosure requirements of new issue purchasers. Oral agreements to repurchase municipal securities at a fixed price are prohibited - any repurchase agreement must be detailed in writing. A. effect a transaction for an accumulation account from the joint accountB. An abstract of the Official Statement is a broker-prepared summary - this is not permitted. recordkeeping and settlement procedures of municipal broker-dealersC. The advertisement must show the tax equivalent yield for an investor in the top tax Federal bracketD. Under the Securities Acts of 1975, the Municipal Securities Rulemaking Board was created and empowered to regulate all of the following EXCEPT: A. disclosure of new information by municipal issuersB. Yes, because the entire $500 contribution is attributable to the MFP under MSRB rulesB. On the other hand, if a broker-dealer initiates a claim against a customer and the customer has not signed an arbitration agreement, then the customer cannot be forced to arbitration (Choice IV). Under the Securities Acts of 1975, the Municipal Securities Rulemaking Board was created and empowered to regulate the: I disclosure of new information by municipal issuersII recordkeeping and settlement procedures of municipal broker-dealersIII profit levels achieved by municipal broker-dealers, A. I onlyB. A non-MFP (non-Municipal Finance Professional) contributes $300 to an elected officials campaign in which he is not entitled to vote. Under MSRB rules, which statement is TRUE regarding disclosure of the relationship? I, II, IIID. The yield at which the transaction was effected and the resulting dollar priceB. If the bond is reoffered at 108, the dealer is taking an 8% mark-up. The contribution can be made without subjecting the member firm to a 2-year ban if both the MFP and spouse sign the checkC. The MSRB has no power to regulate municipal issuers, making Choice I false. The $300 of out of pocket expenses are permitted because the MSRB places a $500 limit on the value of services that can be volunteered to each election campaign by an MFPD. Federal Deposit Insurance CorporationC. MSRB Rule Book PDF Archive. contact enough dealers so that a reasonable market quote is obtained. Form LettersB. $75 desk setC. Under MSRB rules, when recommending municipal securities, the broker-dealer must have reasonable grounds for making any recommendation; the broker-dealer must have reasonable grounds to believe that the recommendation is suitable for the customer; and if the customer refuses to disclose significant financial information, no recommendation can be made. The MFP volunteers his time to the election campaign of a candidate for mayor of the issuer by offering to host a reception. Municipal brokersC. 1/7.00 = 14% reduction in yield, which approximates the percentage mark-up. The MSRB has no authority over municipal issuers. There is no required spread disclosure for competitive bid issues because the spread is very thin on such offerings. MFP is banned for 2 years from being associated with a municipal securities dealerD. For municipal bonds that are traded at par, there is no requirement to show the yield at which the transaction was effected, because it will not differ from the stated rate of interest since the bonds were traded at par. The name of the retail counter-party (the client who was on the other side of the trade) would not be on the confirmation. $125 bottle of perfume. This is only permitted for negotiated underwritingsD. Under MSRB rules, when a municipal dealer acts in an agency capacity, the price charged must be representative of the market for that type of security. Taking this individual to dinner violates the MSRB $100 gift limit B. A. Customer account statementsD. The MSRB political contribution rule only applies to contributions made to elected officials campaigns by MFPs - Municipal Finance Professionals. A Municipal Finance Professional (MFP) gave $550 to the election campaign of her next door neighbor, who is running for the office of mayor of her town. Under MSRB rules, when a municipal dealer acts in an agency capacity, the price charged must be representative of the market for that type of security. Which statement is TRUE? MSRB Rule Book October 2017. make sure the client has a copy of the Official Statement prior to accepting the orderC. The ticket to the game is worth $250. The municipal broker-dealer has its headquarters in the municipality whose bonds are being recommendedC. form letters are exempted from the advertising rules. municipal securities firm employing the MFP is banned for 1 year from engaging in municipal securities business with that issuerC. There is no requirement to obtain a pre-set number of quotes. Municipal bonds should never be purchased in an IRA because they have a lower yield than taxable investments. If the Final is not going to be prepared, but a Preliminary Official Statement is available, then this document must be sent. municipal securities firm employing the MFP is banned for 1 year from engaging in municipal securities business with that issuerC. Under MSRB rules, when a municipal dealer acts in an agency capacity, the price charged must be representative of the market for that type of security. They would simply hand the complaint to FINRA, who enforces MSRB rules for broker-dealers. customer agrees to the arrangement in writingD. (A) All advertisements by a broker, dealer or municipal securities dealer must be based on the principles of fair dealing and good faith, must be fair and balanced, and must provide a sound basis for evaluating the facts in regard to any particular municipal security or type of municipal security, industry or service. The MSRB is empowered to create regulations for participants in the municipals market, but has no enforcement power. A customer wishes to purchase $100,000 face amount of municipal bonds that the broker-dealer does not have in inventory. municipal traders. It does not include competitive bid underwritings because favoritism does not decide the outcome of the auction. Official StatementsD. Municipal bonds are also not subject to the Trust Indenture Act of 1939. A registered representative works in the municipal finance department of a municipal securities firm in a large city and is defined as a Municipal Finance Professional (MFP). The MSRB political contribution rule applies a limit of $250 to a contribution made by an MFP (Municipal Financial Professional) to each campaign without a 2-year ban being imposed. Legal OpinionC. I, II, and IVD. Which statement is TRUE about this? If a non-MFP, such as a typical registered representative, gives a political contribution of any amount to an elected officials campaign in which he or she is, or is not, entitled to vote, this will not trigger a ban! Taking this individual to dinner is permitted because this is business entertainmentD. municipal dealersD. Answer. If prepared by the issuer, it must be distributed to all purchasers by the underwriters at, or prior, to settlement. C. The Conduct Rules apply directly to all transactions between FINRA member firms and members of the public. Will this result in a 2-year ban prohibiting the municipal securities firm from transacting municipal securities business with that issuer? The underwriter must use 2 independent municipal firms to establish the offering priceB. Under MSRB rules, confirmation disclosure for bonds sold at par must include which of the following? The MSRB establishes rules to regulate the activities of broker-dealers and banks that buy, sell and underwrite municipal securities, and municipal advisors that provide advice to state and local governments. See Rules that have new rulemaking activity or compliance resources: Compliance Resource Interpretive Guidance Notice Requests for Comment Since she is out of office, she is not in a position to direct underwriting business to a municipal firm, so G-37 is not applicable. If the bond is reoffered at 6.90%, the dealer is reducing the yield by .10 from the stated 7.00 yield. There is no violation of Rule G-37 if the amount of the contribution is less than $250B. If the customer alleges in a complaint that there has been a monetary loss, the MSRB must be notifiedC. Municipal traders. II onlyC. Excluded from the definition are Official Statements or prospectuses, since their content is subject to legal oversight. There is no requirement to give notice of such an arrangement to the MSRB - if this were the case, the MSRB couldnt do anything about it anyway since they do not enforce their rules (enforcement for broker-dealers is performed by FINRA). A municipal securities firm places the following advertisement: We Hold and Sell New York State 6% TANs. AO Municipal sales persons B Municipal brokers Municipal Bond Mutual Fund distributors C Municipal traders D Previous question Next question The maximum amount that can be given by an MFP to an elected officials campaign in which the MFP is entitled to vote is $250 without any problems. A registered representative (rr) is an MFP of a municipal securities firm that is an underwriter for that municipal issuer. broker-dealer against another broker-dealer. Which statement is TRUE? Each Municipal TransactionC. There is no requirement to file municipal advertising with the MSRB for their approval - they wouldnt know what to do with it since they cant enforce their own rules (remember, FINRA does this for the MSRB). While the Municipal Securities Rule Board (MSRB) regulates all matters related to the underwriting and trading of state and municipal securities, it does not have enforcement powers of its rules. MSRB Rules Flashcards by Candace Houghton | Brainscape Brainscape Find Flashcards Why It Works Educators Teachers & professors Content partnerships Tutors & resellers Businesses Employee training I and IIC. The MSRB regulates all of the following EXCEPT: A. municipal salespersonsB. Under MSRB Rule G-37, a Municipal Finance Professional can give up to $250 to an elected officials campaign in which the MFP is entitled to vote without any problems. The Official Statement for a new municipal issue is not required under the Securities Act of 1933 since municipal issues are exempt, nor is it required by the MSRB, since the MSRB has no regulatory authority over municipal issuers. Which of the following quotes would be considered fair and reasonable? This is prohibited for both competitive bid and negotiated underwritings. A. bonds where a control relationship exists between the municipal broker-dealer and the issuer whose bonds are purchasedC. municipal advertising cannot be materially false or misleadingD. Under MSRB rules, which of the following documents, if prepared, must be sent to the purchaser of a new issue municipal bond? COPs can be characterized by all of the following EXCEPT. It does not include competitive bid underwritings, because the decision of the underwriter cannot be influenced.. This is prohibited for both competitive bid and negotiated underwritings. An MFP (Municipal Finance Professional) lives in Hoboken, New Jersey. Names of the underwriters. consenting to the use of the MFPs name on fund raising literature for an issuer official. It is requested by underwriters to help them perform due diligence on the offering (as required by the SEC) and also to help sell the issue. As long as the car dealer knows where the car can be purchased, say from another dealer, then it can be sold to you). The Securities Acts Amendments of 1975 which established the Municipal Securities Rulemaking Board allow the MSRB to do all of the following EXCEPT create regulations: A. covering municipal related recordkeepingB. required to be prepared by issuers by the Municipal Securities Rulemaking Board for all new issue municipal bondsD. Customer complaints. A registered representative (rr) is an MFP of a municipal securities firm that is an underwriter for that municipal issuer. Enforcement of MSRB rules for registered broker-dealers is performed by FINRAC. Legal OpinionC. Series 6 Prep. It does set settlement procedures, recordkeeping rules, and confirmation disclosure rules for municipal transactions. He does this as a 1-time event and is paid a finders fee for his help. municipal bond option contracts. Trade comparisonsB. This document is requested by underwriters to help them perform due diligence on the offering (as required by the SEC) and also to help sell the issue. the customer will be sent an abstract of the Official Statement. Municipal securities advertising must be approved prior to use by either a municipal securities principal or general principal. A municipal securities firm is hosting an event in its suite at a football game in the city where the firm is headquartered. Which of the following are NOT considered to be advertising by the MSRB? Which statement is TRUE? the customer will be sent a copy of the Preliminary Official StatementD. If the Final is not going to be prepared, but a Preliminary Official Statement is available, then this document must be sent. shorting bond issues in expectation of missed interest paymentsD. How much can a Municipal Finance Professional (MFP) contribute to the clean up campaign to pay off campaign debt of an ex-issuer official that is now out of office because she lost the general election? effect a transaction for a related portfolio from the joint account. For purposes of this rule, the following terms have the following meanings: (i) The term "accumulation account" means an account established in . 4 Q disseminate a quote separately for the securities held by the accountD. This is prohibited under MSRB rules because such ads can only be placed in trade publicationsB. No, the MSRB relies on the NASD to enforce their rules A municipal dealer is reoffering 7% bonds which he bought at par. Written customer complaints should be resolved. The advertisement must state whether the percentage rate shown is the coupon or yieldC. Taking this individual to dinner is permitted because this is business entertainmentD. Upon customer request, a dealer in a competitive municipal syndicate must disclose: A. the spread taken by the underwritersB. III and IV onlyC. This situation is not a campaign contribution. The MSRB is empowered to create regulations for participants in the municipals market, but has no enforcement power. required to be delivered to all purchasers of a new municipal issue at or prior to settlement, if availableC. 108 and 6.00 %B. Official Notice of SaleD. A registered representative wants to invite an individual to join him in the suite to watch the game. The Political Contribution rule prohibits MFPs (Municipal Finance Professionals) from making a contribution of more than $250 to an elected officials campaign in which the MFP is entitled to vote. Official Statements for municipal bond issues, notes, and 529 plansB. approving municipal advertising that will be sent to customersC. The MSRB stated that the following changes to its rules reflect its attempt to harmonize the MSRB's rules with Regulation Best Interest and Form CRS and reduce the potential for conflicting or duplicative regulation in the municipal securities market among Dealers. 6.00 % and 100 1/2C. If a non-MFP, such as a typical registered representative, gives a political contribution of any amount to an elected officials campaign in which he or she is, or is not, entitled to vote, this will not trigger a ban! Municipal TransactionD. I, II, III, IV, There is no requirement to keep Official Statements filed at the firm. If the bond is reoffered at 6.00%, the dealer is reducing the yield by 1.00 from the stated 7.00 yield. Any municipal principal that supervises these functions is also an MFP. The anti-reciprocal rule prohibits mutual funds from compensating brokerage firms for their sales of mutual fund shares by sending their portfolio trades through that firm. I, II, III, IV. disclosure of information on confirmations to customersD. This action will not result in a 2-year ban on the municipal broker-dealer conducting municipal securities business with that issuer because the MSRB rule only applies to MFPsD. If a dispute exists where a broker-dealer has a claim against a customer and that customer has signed an arbitration agreement, then the matter must be resolved by arbitration (Choice B). Which two of the following quotes would BOTH be considered unreasonable? municipal issuersC. MSRB Rule D-9 states that, "Except as otherwise specifically provided by . Customer Complaint. There is no requirement to obtain a pre-set number of quotes (as a contrast, FINRA requires that a minimum of 3 quotes be obtained for non-NASDAQ OTC issues, meaning OTCBB or Pink Sheet issues), nor is there a requirement to direct the customer to a dealer that physically has those bonds. MSRB Rule Book October 2020. (Note: unsolicited transactions would still be acceptable.). Office of the Comptroller of CurrencyB. Because the MFP is entitled to vote in the elected officials campaign, he or she is permitted to make a contribution, up to the maximum federal limit of $1,000. . engaging in personal volunteer work for an issuer officialD. Thus, its claim to make large size markets in municipal bonds is untrue. municipal bond unit investment trustsD. There is no requirement to disclose to a customer the underwriters spread in a competitive bid issue (that is true for negotiated issues only). Each Official Statement. Under MSRB rules, if a Final Official Statement is not yet ready, at the time of settlement of a new municipal securities purchase: A. the transaction becomes voidB. Oral agreements to repurchase securities at a fixed price are prohibited - any repurchase agreement must be detailed in writing. II and IIID. There is no violation of Rule G-37 because the rule would only apply to contributions made to candidates running for office in San FranciscoD. A. I Guaranteeing a customer account against lossII Recommending the purchase of a put option to the customer as protection against lossIII Agreeing to repurchase bonds from a customer personally at a preset priceIV Recommending the use of a repurchase agreement to the customer as a means of protecting against loss, A. I and IIIB. The MSRB does require that syndicate members disclose the identity of the person for whom an order is placed, to the managing underwriter. A. ProspectusB. Sharing in a customer account is prohibited unless the registered representative opens a joint account with the customer; shares in gain and loss in proportion to the capital contributed; and gets written approval for the account from the principal. $100 cashD. Her classmate from college, with whom she has maintained a close friendship for the past 15 years, is running in a campaign to become mayor of Newark, New Jersey. registered representative agrees to reduce the commission rate to be chargedC. II and IIID. All municipal advertising must be approved in advance of use by a municipal principal or general securities principal and copies must be retained for 4 years (note in contrast that FINRAs rule is 3 years). The contribution will cause the member firm to be subject to a 2-year ban prohibiting the firm from engaging in municipal securities business with that issuer. If more is given, the employing firm will be banned from engaging in municipal securities business with that issuer for 2 years. Recommending the use of put options or repurchase agreements to protect against loss are both valid strategies and are permitted under MSRB rules. Second Quarter. Answer and Explanation: 1 Become a Study.com member to unlock this answer! regarding permitted gifts to persons where the gift is related to the municipal securities business. The MSRB online system that gives non-professional investors key information about municipal securities, including issuer financial disclosures, notices of material events, real-time prices, and market statistics is called: EMMA - the Electronic Municipal Market Access system - is an MSRB-created website established specifically for retail customer use. trading municipal issues in the secondary marketD. On the other hand, engaging in personal volunteer work is permitted. municipal bond option contracts. The MSRB does NOT regulate which of the following? The examination procedures contained in this booklet highlight significant aspects of the MSRB's rules. This is the situation in this question. It regulates municipal brokers and dealers, including bank dealers in the municipal market. Under MSRB rules, any claim, dispute, or controversy shall be submitted to arbitration at the instance of a: I broker-dealer against another broker-dealerII customer against a broker-dealerIII broker-dealer against a customer who has previously signed an arbitration agreementIV broker-dealer against a customer who has not previously signed an arbitration agreement, A. II onlyB. This action will result in a 2-year ban on the municipal broker-dealer conducting municipal securities business with that issuer because the amount exceeded $250B. It also sets rules for the conduct of municipal securities representatives - including imposing a $100 gift limit similar to that of FINRA. Which statement is TRUE about this? All of the following statements are true regarding negotiated municipal underwritings EXCEPT the: A. initial offering price of each maturity must be disclosedB. It gives municipal investors access to municipal disclosure documents and municipal price reporting at no charge. The municipal broker-dealer has won every competitive bid for the municipalitys securities over the past 3 yearsD. There must be an original record of the agreement even though dealers may mutually agree to change the terms. Under MSRB rules, which of the following gifts given by a registered representative would be considered excessive? May 2, 2023. requested by underwriters to satisfy SEC due diligence requirements and the disclosure requirements of new issue purchasers. No, because a ban is only triggered when a non-MFP makes a contribution in excess of the de minimis amount. registered representative must share in both gain and lossD. A. SpreadB. The MSRB would simply hand the complaint to FINRA, who enforces MSRB rules for broker-dealers. No, because only $250 of the contribution is attributable to the MFP under MSRB rulesC. Repurchase agreements using exempt securities are not defined as a guarantee under MSRB rules! This section contains some of the significant provisions of the Act and its rules. place a bid for a competitive offer of general obligation bonds being sold at auction by that issuerC. Office of the Comptroller of Currency The MSRB has no power to regulate municipal issuers, making Choice I false. The Political Contribution rule prohibits MFPs (Municipal Finance Professionals) from making a contribution of more than $250 to an elected officials campaign in which the MFP is entitled to vote. I, III, and IVD. If more is given, the employing firm will be banned from engaging in municipal securities business with that issuer for 2 years.
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