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MSRB Rules

Series 52

QuestionAnswer
Who enforces MSRB rules? SEC FINRA FRB FDIC Comptroller of the Currency
What are the coverage amounts on SIPC and who is covered? Only applies to customers, not non-dealer banks. $500,000 per customer, with $250,000 in cash losses.
There is a 90-day apprenticeshipp for all persons seeking to become a municipal securities rep. Apprentice may not: 1. Discuss with the public 2. Be compensated for transactions 3. May not receive sales commissions or bonuses for municipal activities
Municipal Securities Principal must pass Series ___. 53
Municipal Fund Securities Limited Principal must mass Series ____. 51
RR's are required to participate in ___ ____ training on the second anniversary of their initial registrations and every __ years thereafter for remainder of their careers. NO GRADUATION! Regulatory Element 3
Every b/d and muni securities dealer shall obtain from each of its associated person of questionnaire, which shall be signed by a muni securities principal the following info: Name, address, SS#, DOB, complete consecutive 10 year employment history, 5 year residential history, any denials or suspensions related to the securities industry. Any convictions of 10 yrs.
CONTINUATION CARD for Information regarding associated persons Dealer shall make inquiry of all employers of such person during the 3 yrs immediately preceding such persons assoc. with with such broker. If 3rd party req. info, it shld be made avail. w/i 10 biz days following the request. (req stay on file for 3 yrs)
When should an Investor Brochure be mailed out? It should be delivered to a customer promptly upon receipt of a complaint
An account established in connectionwith a municipal securities investment trust to hold securities pending their deposit in such trust. Accumulation account
Every municipal securities dealer shall disclose at the time of submission of such order if the securities are being purchased for its dealer account or for a related account of such municipal securities dealer. Disclosure of capacity
Sales of securities held by a syndicate to a related account shall be confirmed by the syndicate manager directly to such related account or for the account of such related account submitting the order. Confirmation of Sale
Every municipal securities dealer that submits a group order to a syndicate or to a member of a syndicate shall disclose at the time of submission of such order the identity of the person for whom the order is submitted. Disclosure of Group Order
Final settlemnt of a syndicate or similar account formed for the purchase of securities shall be made within __ caelndar days following the date issuer delivers the securities to the syndicate. Settlement of Syndiate or Similar Account 30
All syndicate or similar account members shall submit the allocations of their designations according to the rules of the syndicate or similar account to the syndicate or account manager with __ biz days following date the issuer delivers sec. to the syn. Payment of designation 2
Ea. party of a trans. shall send a conf. of the trans. to other party in trade;Cash trans. shall be exch by fone on trade date, w/written conf. sent w/i 1 biz day follow trade date;"when, as & if issued", conf. shall b sent w/i 1 biz day foll trade date. Dealer confirmations
An inter-dealer transaction eligible for comparison by a clearing agency registered with the commission shall be compared through a registered agency. Use of Automated Comparison, Clearance and Settlement Systems
Refusal to accept securities which have been presented for delivery Rejections
Return by the receiving party of securities previously accepted for delivery. Reclamation
Transactions which have been confirmed or otherwise agreed upon by both parties but which have not been completed. Close out
Any bid for, orffer of, municipal securities, or any requests for bids or offers of municipal securities. Quotations relating to municipal securities
No municipal securities dealer shall distribute or publish any quotation relating to municipal securities unless the quote represents a bonafide bid for, offer of, municipal securities of such municipal securities dealer. Bona fide quotation
Every municipal securities dealer shall report to the Board information about each purchase and sale transaction effected in municipal securities to the Real Time Transaction Reporting System (RTRS) Report of Sales or Purchases
At or before the completion of a transaction in municipal securities with or for the accoutn of a customer, municipal securities dealer shall give or send a written confirmation with includes: Name, address & telephone #, name of customer, whether order was for purchase/sale, capacity in which dealer acted: (prin for its own acct, agent for customer, agent for person other than customer or agent for both people)
In the conduct of the municipal securities activities, municipal securities dealer shall deal fairly with all persons and shall not engage in any deceptive, dishones or unfair practice. Conduct of Municipal Securities and Municipal Advisory Activities
When executing a transaction in municipal securities, the municipal securities dealer shall make a reasonable effort to obtain a price that is fair and reasonable in relation to prevailing market conditions. Execution of Transactions
In recommending to a cusotmer any municipal securities transactions, municipal securities dealer shall have reasonable grounds that such customer for believing that the recommendation is suitable. Suitability of Recommendations and Transactions Discretionary Accounts
No municipal securities dealer shall effect a transaction in municipal securities with or for a discretionary account unless: 1. Written authorization of the customer and accepted in writing by the Principal 2. Unless they first determine that the transaction is suitable for the customer
No muni sec dealer shall directly, or indirectly, give or permit any gratuities, in excess of $__ per year to a person other than a employee or partner of such b/d, if such pymts are in relation to the muni sec activities of the employer of the recipient $100
Any material published or used in any electronic or other public media, or any written or other public media, or any written or electronic promo literature distributed or made generally avail. to cusotmers of the public Advertising
What are advertisements? Abstract or summaries of POS or offering circular, notice, circular, report, market letter, form letter, telemarketing script, seminar text or press release
What are NOT advertisements? POS OS
Shall be deemed to exist if a broker or municipal securities dealer controls, is controlled by, or is under common control with the issuer of the security or a person other than the issuer who is obligated with respect to debt service on the security. Control relationship
If control relationship exists, the dealer must disclose the customer: Nature of the control relathship. If not in writing, such disclosure concering the control relationship at or before the completion of the transaction.
A financial advisory relationship shall be deemed to exist when a broker or municipal securities dealer enters into an agreement to render FA or consultant services with respect to a new issue of muni securities including advice on: 1. Strucuture 2. Timing 3. Terms
If FA wanted to bid on a competitive deal, what has to be done? The issuer has expressed in writing prior to bid of such acquisition or participation. FA relationship does not have to be terminated.
No BD to non-public info concerning the ownship of muni securities that was obtained by such BD or MSD in the course of acting in a fiduciary or agency capacity for an issuer of muni sec, shall use info to sell or buy or otherwise make sure of nfo EXCEPT With the consent of issuer or such broker or municipal securities dealer or the person on whom behalf of the info was given.
No broker or municipal securities dealer shall make improper use of municipal securities or funds held on behalf of another person. 1. can't guarantee against losses 2. can't share in profits or losses of customers accts
A broker or municipal securities dealer can participate in his/her private capacity in an investment partnership or joint account, provided that such participation is: Solely in direct proportion to the financial contribution made by such person to the partnership account. (They have to invest the same amount of $)
Every broker or municipal securities dealer shall supervise the conduct of the municipal securities activities of the dealer and its associated persons to ensure compliance with Board rules and applicable provisions of the act. Supervision
Each dealer shall establish and maintain a system to supervise the municipal securities activities of each RR, RP and other associated persions. Supervisory System
Each dealer shall maintain and enforce written supervisory procedures reasonably designed to esnure that the conduct of the muni securities activities of the dealer and its associated persons are in compliance. Written Supervisory Procedures
Each dealer shall conduct a review, at least annually, of the muni securities activities in which it engages, which review shall be desinged to assist in detecting and preventing violations Internal inspections
Each dealer shall establish procedurs for the review by a designated principal of incoming and outgoing written and electronic correspondence of its muni sec. rep. with the public realting to the muni sec. activities of such dealer. Review of correspondence
No BD or MSD shall open or maintain an account in which the customer is an employee of another firm, or the spouse or minor child. If they do, send duplicate confirms to their b/d.
Every office shall have a copy of all rules of the Board as from time to time in effect and shall make such rules available for examination by customers promptly upon request. Availability of Board Rules
No BD or MSD shall purchase muni sec. for its own acct from a customer or sell muni sec for its own acct to a customer except at an aggregate price (including any mark-up/down) that is fair and reasonable, taking into consideration all relevant factors: The best judgment of the BD or MSD as tho the fair market vlue of the securities at the time of the transaction, the expense involved in effecting the transaction and the fact that the BD or MSD is entitled to a profit. PRINCIPAL TRANSACTIONS
No BD or MSD shall purchase or sell muni sec. as agent for the customer for a commission or service charges in excess of a fair and reasonable amount, taking into considerations all relevant factors: Availabilit of securities involved in the transaction, the expense of executing or filling the customer's orders and the amount of any other compensation received or to be received by the BD or MSD in connection with the transaction.
No BD or MSD shall solicit transactions in muni securities with or for the account of an investment company as compensation or in rturn for sales by such BD or MSD of participation, shares, or unites in such investment company. Reciprocal Dealings with Municipal Securities Investment Companies
No BD or MSD shall sell any offered muni sec to a customer unless such BD or MSD delivers to the customer by no later than settlement of the transaction a copy of the OS. Customer Disclosure Requirements
The undewriter of a primary offering of muni sec shall submit the OS for such offering to EMMA within 1 business day after receipt of the OS from the issuer, but no later than the closing date. Underwriter Submissions to EMMA
A BD or MSD that, acting as FA, prepares an OS on behalf of the issuer with respect to a primary offering of muni sec shall make the OS avail to the managing U/W or sole U/W in a designated electronic format promptly after issuer approves its distribution Preparation of Officical Statements by FA's
When to apply for CUSIP numbers in a negotiated sale? No later than the time that the pricing information for the issue is finalized.
When to apply for CUSIP numbers in a competitive sale? Immediately after receiving notification of the award from the issuer.
How much can a muniicpal finance professional give to a candidate that they are entitled to vote for? $250
How long is the ban if you violate Rule 37, political contributions and prohibitions on municipal securities business? 2 years
Prohibits municipal securities from soliciting business from an investment company (bond fund) as compensation for sales by that firm of the investment company's shares or units. Solicitation of Municipal Securities Business The funds manager has an obligation to choose executing broker dealers based on which brokers's provide the best execution services, and not based on which brokers sell large amount s of the fund's shares.
No broker, dealer can call any residence before the hours of __ of after __ (their local time) 8 am 9 pm
If broker calls before 8am or after 9pm, they must have the following: 1. Established business relationship 2. Received person's prior express invitation or permission. 3. Person called is a broker, dealer or municipal securities dealer
Any person that previously has stated that he/hse does not wish to receive an outbound telephone call made by that specific broker dealer. Firm specific Do-Not-Call-List
National do not call list EXCEPTIONS: 1. Established business relationship 2. Prior expres written consent 3. Personal relationship
Every broker shall establish and implement an anti-money laundering compliance program reasonably designed to achieve and monitor ongoing compliances with the requirements of the Bank Secrecy Act. Anit-Money Laundering Compliance Program
Created by: swalmurph2