Series 51 flashcards

32 cards. Read the term and the definition here. The deck at the top of this page is optional.

Municipal fund security

An interest in a 529 savings plan, ABLE program, or local government investment pool that is issued by a municipal fund issuer and governed by MSRB rules.

529 savings plan

A state-sponsored qualified tuition program in which contributions are invested in portfolios; qualified withdrawals are federal income tax-free and nonqualified withdrawals tax earnings plus a 10% penalty.

ABLE account

A tax-advantaged account for individuals whose disability began before age 26; withdrawals for qualified disability expenses are tax-free, subject to annual contribution limits.

Local government investment pool

A pool that invests cash of local governments, typically seeking a stable net asset value; interests are municipal fund securities and are not FDIC insured.

Prepaid tuition plan

A 529 structure that lets account owners buy tuition credits or units at current prices for use in the future; it differs from a savings plan.

Direct-sold 529 plan

A plan bought directly from the program without a commissioned financial advisor; it generally has lower fees than advisor-sold share classes.

Advisor-sold 529 plan

A plan sold through broker-dealers or advisors, often using share classes that carry sales charges, distribution fees, and ongoing service fees.

Plan disclosure document

The offering document for a municipal fund security that describes investment options, fees, risks, tax treatment, and withdrawal rules for the plan.

Rule G-19 suitability

MSRB rule requiring a reasonable basis for a recommendation and suitability based on the customer's objectives, risk tolerance, time horizon, tax status, and liquidity needs.

Rule G-17 fair dealing

MSRB rule prohibiting deceptive, dishonest, or unfair practices and requiring dealers to deal fairly and disclose material conflicts of interest.

Rule G-21 advertising

MSRB rule governing advertising and sales literature; communications must be fair and not misleading, principal-approved, and retained as records.

Rule G-15 confirmation

MSRB rule requiring transaction confirmations to disclose price, sales charge, compensation, and that municipal fund securities are not FDIC insured and may lose value.

Rule G-37 pay-to-play

MSRB rule that restricts municipal securities business after certain political contributions to issuer officials; it can apply to state-sponsored 529 plan distribution.

Rule G-20 gifts

MSRB rule limiting gifts and gratuities to persons; generally no gift may exceed $100 per person per year, and non-cash compensation must be recorded.

Sales charge disclosure

Confirmations and offering documents must disclose sales charges, distribution fees, and other compensation paid in connection with a municipal fund security transaction.

Balanced performance presentation

Advertising showing 529 or ABLE performance must be fair and not misleading, must not imply guaranteed results, and should include fees and risks.

Rule G-44

MSRB rule requiring written supervisory procedures for municipal fund securities, an annual compliance review, and designation of a municipal fund securities limited principal.

Series 51 principal

A municipal fund securities limited principal qualified to supervise municipal fund securities activities; the designation is required under MSRB Rule G-44.

Annual compliance review

A review required at least annually under MSRB Rule G-44 to assess the adequacy of supervisory procedures and compliance with applicable rules.

Rule G-27 supervision

MSRB rule requiring supervision of representatives, including review of transactions, correspondence, and customer complaints, with follow-up and documentation.

Rule G-8 records

MSRB rule specifying books and records municipal securities dealers must make, including order tickets, confirmations, and customer complaint records.

Rule G-9 preservation

MSRB rule requiring preservation of books and records, generally for six years, with the first two years readily accessible.

Customer complaint record

A documented record of a customer complaint, including the response and resolution, required to be kept and reviewed under supervisory procedures.

Written supervisory procedures

A dealer's documented policies and controls reasonably designed to achieve compliance with MSRB rules and federal securities laws for municipal fund securities.

MSRB

The Municipal Securities Rulemaking Board, a self-regulatory organization with SEC oversight that writes rules for municipal securities dealers, brokers, and municipal advisors.

Exchange Act Section 15B

Federal law requiring municipal securities dealers to register with the SEC and to comply with MSRB rules and applicable federal securities laws.

Securities Act Section 3(a)(2)

Federal exemption from Securities Act registration for municipal securities, including municipal fund securities such as 529 plan and ABLE program interests.

Rule G-3 qualification

MSRB rule requiring persons to be qualified before engaging in municipal fund securities activities; representatives take Series 52 and limited principals take Series 51.

Rule G-32 disclosure

MSRB rule requiring disclosure in primary offerings; for municipal fund securities, the program disclosure document must be provided to investors.

Regulation Best Interest

SEC rule requiring broker-dealers to act in the best interest of retail customers when recommending securities, including municipal fund securities, with conflict disclosure and care obligations.

SEC oversight

The SEC oversees the MSRB, reviews and approves MSRB rule changes, and shares enforcement responsibility with FINRA and bank regulators.

FINRA enforcement

FINRA examines and enforces MSRB rules for its member firms and associated persons; the SEC and bank regulators enforce MSRB rules for other entities.