Series 50 key terms

An advisor's obligation to act in the best interests of the municipal entity client, putting the client's interests ahead of its own, exercising due care, and making full disclosure of material information.

Any personal, financial, or business interest of an advisor, or of a person associated with it, that could reasonably bias the advice given to a municipal entity client.

Written notice to the municipal entity client, in a clear and timely manner, describing material conflicts of interest and how the advisor will manage, mitigate, or avoid them.

MSRB rule that generally bars an advisor from providing municipal advisory services for compensation to an issuer for two years after certain political contributions to officials of that issuer.

Rule limiting gifts, gratuities, and entertainment given to employees or officials of an issuer or other covered person to $100 per person per year, subject to stated exceptions.

Requirement that advisors deal fairly with all persons, avoid deceptive or dishonest practices, and disclose material facts about the advisory relationship and any conflicts.

A firm or person that provides advice to or on behalf of a municipal entity or obligated person about municipal financial products or the issuance of municipal securities, and that is regulated under federal law.

The formal relationship created when a municipal entity engages an advisor to provide advice, which triggers fiduciary duties, disclosure obligations, and documentation requirements.

A written agreement documenting the scope, fees, terms, and conflict disclosures of a municipal advisory engagement, as required by MSRB rules before or at the start of the work.

A clear description in the engagement documents of which advisory activities the advisor will and will not perform, defining responsibilities and reducing misunderstandings with the client.

A written statement telling the client how the advisor will be paid, including contingent or success-based fees and any payments from third parties, provided at or before engagement.

A bond, note, or other debt obligation issued by a state, local government, or public authority to finance projects or operations, repaid from taxes, revenues, or other pledged sources.

A municipal bond secured by the full faith, credit, and taxing power of the issuing government, rather than by a single dedicated revenue stream.

A municipal bond payable only from revenues generated by a specific project or enterprise, such as a water system or toll road, and not from the issuer's general taxing power.

A short-term municipal note issued in expectation of later issuing long-term bonds, typically repaid from bond proceeds or rolled over until permanent financing is sold.

A bond issued to retire outstanding debt before or at its maturity, often to reduce interest cost, remove restrictive covenants, or restructure the repayment schedule.

The disclosure document prepared for a municipal securities offering that describes the issuer, the security for the bonds, financial information, and the principal risks to investors.

An issuer's ongoing duty under SEC Rule 15c2-12 to provide annual financial information and notices of specified events to investors after the bonds are sold.

The state, local government, authority, or other entity that borrows money by selling municipal securities and is legally obligated to repay investors.

A broker-dealer that buys municipal securities from the issuer, often through a competitive or negotiated sale, and resells them to investors, typically using an official statement.

A defined category of financial transactions, including municipal derivatives and guaranteed investment contracts, about which an advisor may advise a municipal entity and thereby become subject to regulation.

A financial contract whose value depends on an underlying interest rate, index, or asset, used by issuers to manage interest rate, commodity, or other risks on municipal debt.

A contract in which two parties exchange interest payment streams, commonly used by an issuer to convert variable-rate debt into a synthetic fixed rate or the reverse.

The stated principal figure used to calculate the payments owed under a derivative contract; it is a reference number and generally is not exchanged between the parties.

The risk that the rate received under a hedging arrangement moves differently from the rate paid on the underlying debt, producing a mismatch in the issuer's cash flows.

The risk that a derivative ends early, whether at the counterparty's option or because of default or rating triggers, forcing the issuer to pay a termination amount or lose the hedge.

The risk that the other party to a derivative or investment contract fails to make required payments or otherwise defaults on its obligations to the issuer.

An agreement in which a financial institution promises a specified rate of return on invested bond proceeds for a set period, with repayment dependent on the provider's creditworthiness.

The Municipal Securities Rulemaking Board, the self-regulatory organization that writes rules for municipal securities dealers and municipal advisors under oversight of the SEC.

The U.S. Securities and Exchange Commission, the federal regulator that oversees the municipal securities market, reviews MSRB rulemaking, and administers municipal advisor registration.

The SEC rule that defines the term municipal advisor, lists exclusions from that definition, and establishes the fiduciary and recordkeeping duties that apply to registered advisors.

MSRB rule governing municipal advisor conduct, requiring a fiduciary duty to the municipal entity client, written conflict disclosures, and documentation of the advisory relationship.

MSRB rule requiring municipal advisors to adopt, implement, and maintain a written supervisory and compliance system reasonably designed to achieve compliance with applicable securities rules.

The SEC registration form filed by municipal advisory firms, disclosing the firm's business, ownership, employees, and disciplinary history so the public and regulators can review it.

A firm that has completed SEC registration on Form MA and is therefore subject to the municipal advisor rule's fiduciary duties, disclosure obligations, and compliance requirements.

Written policies and procedures a municipal advisory firm adopts to detect and prevent violations of securities laws and MSRB rules, including monitoring, training, and escalation steps.

Oversight by a designated principal or compliance officer of advisory personnel and activities to confirm they follow applicable rules and the firm's written policies.

The individual charged with running a municipal advisor's compliance program, including training staff, monitoring activities, conducting reviews, and reporting issues to senior management.

The duty to make and preserve books and records of advisory engagements, communications, and disclosures for the periods required by MSRB and SEC rules, generally at least five years.

A yearly assessment of whether the firm's compliance policies and procedures remain adequate, with the findings reported to senior management and used to strengthen controls.