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23 Cards in this Set

  • Front
  • Back
What does MSRB stand for?
Who does it regulate
Municipal Securities Rulemaking Board.

The MSRB regulates ALL FIRMS dealing in municipal securities.

The MSRB does not regulate issuers.
MSRB rules are subject to approval by whom?

Who enforces MSRB rules? Who's the primary enforcer?
The MSRB rules must be approved by the SEC. SEC is the top leverl and oversees all SRO's

The primary enforcer of MSRB rules is FINRA (NASD)
other enforcers include:
SEC
Governors of the Federal Reserve Banks
Comptroller of Currency
Federal Deposit Insurance Corporation (FDIC)

US TREASURY AND NYSE DO NOT ENFORCE MSRB RULES
NASD is the same as?
FINRA (newer version of NASD)
Registered person: Disqualifaction from MSRB
"If any of the regulatory agencies decide the don't like you, the MSRB automatically doesn't like you either."
MSRB require maintenance of records for how many years? (for each of three categroies)
3 YEARS - Correspondence, advertisements, sales literature, and confirmations

6 years - Account records, COMPLAINTS, ledgers

0 years - (OS) Official Statements
MSRB rules prohibit quotation that are not bonafide. There are three points to remember when quoting a muni:
- Quotations must be relevant to the CURRENT MARKET VALUE of the security.
-The cost or value of the DEALER'S inventory is NOT a factor in quoting. It's the total current market.
-The rules require FAIR AND REASONABLE PRICES for each customer transaction.
In determining suitability for muni bonds, what is important?
Maturity date
Rating
Tax bracket of investor

A broker must REFUSE to take the order if the muni bond is not suitable for the client.
What is a control relationship?

FULL DISCLOSURE
A control relationship is where the muni dealer has some sort of relationship with the issuer of a muni bond that needs to be disclosed.

Examples:
muni bond dealer is also financial advisor to issuer

Elected official also works for the muni bond dealer

Partner of a muni bond dealer also sits on the board of a corporation who had the issuer issue industrial revenue bonds on behalf of the corporation
Control relationships must be disclosed. How?

FULL DISCLOSURE
Control relationships must be disclosed to clients in WRITING at or before the transaction completion.

IF A CLIENT HAS A DISCRETIONARY ACCOUNT, THE CLIENT MUST AUTHORIZE THE TRANSACTION PRIOR TO EXECUTION.
If a firm is acting as a financial advisor for a municipality......?

(Competitive, Negotiated)
If a firm is the muni's financial advisor and tells the municipality to do a competitive bid - the firm can also be a potential underwrite for the issue of the GO bonds IF THEY RECEIVE PERMISSION FROM THE ISSUER FIRST.

If the firm acts as financial advisor and advises the municipality to do a negotiated sale on a revenue bond ---- the firm can not be the underwriter unless it first terminates its relationship with the municipality as financial advisor

Competitive Bidding - 2 hats
Negotiated Sale - 1 hat only
For discretionary accounts, written authorization needs to be received when
-for a municipal customer?
-for a regular customer?
For a municipal customer the written authorization must be obtained at or before the first transaction's SETTLEMENT

For a regular customer, the written authorization must be obtained at or before the first transaction is made.
Real time pricing under MSRB is?
15 minutes using the TRACE system
Churning is always illegal. What is churning?
Excessive trading in size or frequency
MSRB arbitration says that when arbitration is signed it would be brough before what?
An impartial panel
A representative can not do what under MSRB rules for 90 days?
Talk with the public or receive commissions.
Muni Bond trades between firms are usually settled with?
"Clearning House Funds"

Used to settle transactions that settle in one day
For Bearer bonds, the unit of delivery is a MINIMUM of?
$1,000
For Bear bonds, the unit of delivery is USUALLY?
$5,000
For registered bond, the unit of delivery is
$1,000 increments, up to $100,000.
Book entry form is?
Book entry does not send out a certificate, it's only on the books of the paying agent. The customer would get a CONFIRMATION.
Mutilated Certificates
You must clearly be able to identify all of the following or the cert is not in good delivery:
Name of issuer
Par value
Signature
Coupon Rate
Maturity Date
Seal of the issuer
Bond or note number

BUT THE CUSIP CAN GET RIPPED OFF AND THAT'S OKAY
What is an assignment?
The back side of a certificate.
Must be filled out and signed by the back of the seller.

If the seller forgets to sign the back, you would send them a copy of the backside and it would be called a "stock power," "bond power," "or "separate assignment form"

The seller would sign it and send it back. You would staple that copy to the back of the cert. Then send it to the agent.
Certificates are not in good delivery from a dead person or minor unless..
you have proper legal documentation