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Series 53 > Chapter 3 > Flashcards

Chapter 3 Flashcards

1
Q

MSRB Rule G-17

A

must engage fairly with all persons. No corrupt or unfair practices

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2
Q

MSRB Rule G-28

A

Employee Account disclosure

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3
Q

MSRB Municipal Firm Registration

A

Requires all Municipal Securities dealers to register with the MSRB in addition to the SEC.
MSRB registration form is A-12

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4
Q

Definition of a Municipal Firm

A

Engaged in the business of buying and selling municipal securities for their own accounts. Also includes separately identifiable department or division of a bank.

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5
Q

Sec Requirement for Municipal Securities Dealers

A

All such dealers that do business through interstate commerce or mail must register with the SEC.

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6
Q

A-12 registration uses

A
  1. Registration for dealer before engaging in municipal securities activities
  2. Registration for dealer before engaging in municipal advisory activity
  3. Update info within 30 days for relevant changes
  4. Affirm registration info annually
  5. Notifying MSRB that the firm ceased functioning, has been barred or suspended by a regulatory body./
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7
Q

A-12 contact uses

A 
All contacts on the A-12 must be a series 53.
Primary regulatory contact 
a master account administrator
a billing contact
a compliance contact 
a primary data quality contact
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8
Q

A-12 Info

A 
Name
SEC Dealer ID
SEC Muni Adviser ID
CRD Number
Legal Entity Identifier
Address
Website
Organization type
city and state
Written notice to Securities association or regulatory agency
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9
Q

Form A-12

Business Activities Info

A 
All that apply
Broker Dealer - Municipal Fund Securities Activities
Broker Dealer - Sales/Trading Activities
Broker Dealer - Other Activities
Municipal Advisor Activities
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10
Q

SEC registration time frame

A

The sec will either grant the registration or start proceedings to deny registration within 45 days of receiving the application.

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11
Q

If a bank is transacting in municipal securities the transacting department must be

A

A Separately identifiable department.

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12
Q

Rule G-27

A

Requires Municipal Dealers to supervise there municipal business and associated persons.

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13
Q

U4 or MSD -4 for banks

Info

A

Name, Address, SSN
DOB
ten years of employment
last five years of residence.
Any denial revocation or disciplinary action by a stat or regulatory agency
Record of permanent or temporary injunctions for bribery burglary forgery or counterfeiting.
Ten year history of securities related convictions
Criminal Disclosures including charges
Record of Bankruptcies
Record of fidelity bond refusal
Record of any aliases

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14
Q

MSD-4 OR U4

RETENTION

A

3 Years from termination.

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15
Q

MSD-4 OR U4

update time frame

A

30 days from change

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16
Q

Employer verification of U4

A

an employer is expected to check the previous three years of info for accuracy. If they reach out to another firm to verify info the other firm has 10 days to respond.

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17
Q

Rule G-44

System Rule

A

Requires a system be established implemented and maintained to supervise advisory activities.

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18
Q

G-44

Principal Responsibility

A

Firms must designate at least on principal to make sure compliance processes are in place and principals not only review but test them.

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19
Q

Term Municipal Adviser

Does not include

A

does not include a BD or MD serving as an underwriter nor does it include Investment adviser registered under the Investment Advisers Act of 1940.

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20
Q

CCO Requirement

A

Every firm must also designate a CCO.

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21
Q

Required Compliance Procedures

A

Dealer compliance with applicable rules
Supervision of all associated persons
Handling of customer complaints
Regular and frequent review and approval of customer accounts
Periodic review of each office conducting municipal business
Supervision of processing, clearing and safekeeping
Prompt review and written approval of account opening
Prompt review and written approval for each municipal transaction (daily)
Review of correspondence

22
Q

Written Procedures and systems

A

Must define the dealers supervisory systems and record each supervisory designation and the designated principals supervisory responsibilities

23
Q

Rule G-27

Correspondence pre-use review

A

IF correspondence is allowed to be disseminated without prior review training is required for employees about procedures and policies to maintain records. Dealer must document how and when employees are educated/trained

24
Q

Number of required principals

A

Each firm must have 2 principals unless
To have only 1 principal one of the following situations has to occur
1. They have a general securities business and are registered with finra and have two general securities principals
2. a BD that has 11 or fewer persons performing municipal security activities or bank municipal dealer

25
Q

A person may act as a MSP without have the 53 if

A

they have a series 52, series 7, 24 or 9/10 for 90 days.

26
Q

Supervision Activities that require a Series 53

A
  1. Underwriting, Trading or sales of municipals
  2. Financial advisory or consultant services for issuers
  3. Processing, clearance, and (for non bank dealers) safekeeping of municipals
  4. Research or investment advice related to munis
  5. Activities that involve communication direct or indirect with public investors in munis
  6. Maintenance of muni records
  7. Training of muni principals, muni limited principals or muni securities representatives
27
Q

Supervision 9/10

A

May supervise sales activities
opening of customer accounts and transactions in customer accounts.
actions to be taken following a complaint
May be a branch manager

28
Q

Licenses for a municipal securities sales principal

A

9/10

29
Q

Municipal Fund Securities Limited Principal

A

Series 51.
FIrms registered with FINRA don’t have series 53 principals. Can supervise municipal fund only accounts with a 24 or 26 and a 51

30
Q

Series 24

A

general securities principal

31
Q

series 26

A

Investment company/variable contracts principal

32
Q

Municipal Securities Firms Principal Requirement

A

they can count series 51 towards the requirement instead of series 53.

33
Q

Rule G-27

A

Series 53 supervisors are responsible for all activities in a branch including those supervised by a 9/10.

34
Q

FINOP

A

Series 27/28

Required of firms registered with FINRA not required by the MSRB

35
Q

FINOP Responsibilities

A
  • Prepare Financial Reports
  • Maintain books and records
  • are involved in processing and clearing functions of the firm and
  • are involved in the safekeeping functions of the firm.
36
Q

Municipal Advisors

Registration Form

A

Must be registered using form MA

Note: MA-1 is for the employees not the firm

37
Q

Municipal Advisers

defined

A

Firms that advise states, governments, plans non profits etc on munis or investments related to munis offering. They also solicit these same entities for investment banking, financial advisory and investment advisory work.

38
Q

Municipal Advisers Principal

A

Must have at least one municipal adviser principal

Both the principal and supervised advisers currently take the series 50. A principal test is in development.

39
Q

Municipal Securities representative

licenses

A

series 52 or series 7

40
Q

Municipal Securities representative

allowed duties

A
  • Underwriting, trading or sale of municipal securities
  • Financial Advisory or consultant services connected with issuance of munis
  • Research or investment advice with respect to munis
  • Other activities that involve direct or indirect communication with the public regarding munis
41
Q

Municipal Securities representative

exam period

A

180 days to pass the exam.

Waivers for the exam are rare and you must demonstrate an exceptionally strong background in municipal financing

42
Q

Selling repackaged munis like municipal bond funds and UIT’s

A

Must be a 6 or 7.

A 53 can’t sell these

43
Q

Series 6

A

can not sell munis only repackaged products

44
Q

Failed Exam time table

A

30 day wait the first time

six months after the third fail

45
Q

Rule G-4

A

Statutory Disqualification

46
Q

Statutory Disqualifications

A

G-4

  1. Has been suspended/expelled from any other SRO
  2. Subject of an SEC order suspending or revoking registration
  3. Caused the suspension or expulsion of a firm due to individual conduct
  4. Has willfully filed false or misleading application or omitted material facts
  5. Denied registration by an SRO
  6. Convicted of any securities or money related offense in the last 10 years.
  7. Temporarily or permanently enjoined from engaging in securities business.
47
Q

Rule G-5

A

If the SEC or SRO has placed restrictions on a BD or person they can’t in any way attempt to circumvent the restriction.

48
Q

Felonies

A

Any felony must be disclosed regardless of type

49
Q

Firm Element

A

annual training for

  1. regulatory developments
  2. performance of personnel related to regulatory element
  3. supervisory needs
50
Q

G-30

A

Prices and commissions

51
Q

G-32

A

Provide the OS or stickered OS

52
Q

G-37 or G-37x

A

Political contributions

Series 53 (19 decks)

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