Series 51 key terms

A municipal security issued by a state, local government, or governmental instrumentality whose proceeds fund a specific public-purpose program, such as a Section 529 savings plan, an ABLE account, or a local government investment pool.

A state-sponsored savings program authorized by Internal Revenue Code Section 529 that lets an individual save for another person's education, with tax-deferred growth and tax-free withdrawals when funds pay qualified education costs.

A state-sponsored account created under Internal Revenue Code Section 529A that allows a person with a qualifying disability to save money, with earnings and withdrawals for qualified disability expenses free of federal income tax.

A pooled investment vehicle established by a state or local government to invest public funds on a short-term basis, typically seeking safety of principal, liquidity, and current income, and offered to investors as municipal fund securities.

The state agency, authority, or other governmental entity that establishes a 529 or ABLE program, authorizes issuance of its municipal fund securities, and typically selects the program manager through contract.

The investment firm or financial institution contracted by the state sponsor to administer a 529 or ABLE program, manage the underlying portfolios, and supply recordkeeping, servicing, and marketing support.

The person who opens and controls a 529 or ABLE account, selects the investment options, directs withdrawals, and generally may change the designated beneficiary or move the account to another program.

The individual whose education or disability expenses the account is meant to fund; the beneficiary must be identified when the account is opened and generally must be a family member of the owner for 529 purposes.

Costs such as tuition, fees, books, supplies, required equipment, and certain room and board that allow tax-free 529 withdrawals; the category also covers limited student loan repayment and certain apprenticeship costs.

Expenses connected to the beneficiary's blindness or disability that help maintain or improve quality of life, including education, housing, transportation, health care, and assistive technology, and that permit tax-free ABLE withdrawals.

An investment option that automatically shifts from stock-heavy to bond- and cash-heavy allocations as the beneficiary approaches the assumed enrollment date, gradually reducing risk as college draws nearer.

A tax-free movement of assets from one 529 plan to another, or from a 529 to an ABLE account within permitted limits, generally allowed once every twelve months for the same beneficiary without changing the account owner.

A registered representative who has passed the Series 51 qualification exam and is authorized to sell municipal fund securities, including 529 plans, ABLE programs, and LGIP interests, on behalf of a broker-dealer.

The offering document for a 529 or ABLE program that describes investment options, fees, tax treatment, state tax benefits, and risks, and that must be furnished to investors before or at the time of purchase.

Promotional material about municipal fund securities or a firm's related services that is distributed to investors and is subject to MSRB advertising standards, including principal review before first use and retention of copies.

An unaffiliated person or firm compensated for referring investors to a 529 or ABLE program; the arrangement and any resulting conflict of interest must be disclosed so the customer understands who is being paid and why.

A statement from a customer, public figure, or other person about an investment firm or municipal fund securities program; MSRB advertising rules limit such statements and require that they be balanced and not misleading.

A primary distribution of municipal fund securities, such as 529 plan units, in which securities are sold to investors on an ongoing basis rather than in a single closing on one issue date.

A firm's documented policies and steps for supervising municipal fund securities activity, including review of recommendations, advertising, correspondence, and complaints, and the designation of responsible supervisors.

The requirement that a qualified principal review and approve sales material about municipal fund securities before its first use and keep records showing who approved it and when.

Ongoing training required of registered persons after initial licensing, consisting of a firm element set by the employing broker-dealer and a regulatory element set by the securities regulator at fixed intervals.

Any employment, business, or compensated activity a representative conducts apart from the employing broker-dealer, which must be reported so the firm can evaluate conflicts of interest and supervisory risk.

A grievance from an investor about a firm's municipal fund securities activity; it must be logged, investigated, and resolved, and the record retained and made available for regulatory examination.

A yearly assessment by a municipal securities principal of whether the firm's supervisory and compliance policies for municipal fund securities remain adequate, required to be documented and supported by an annual certification.

The self-regulatory organization, overseen by the SEC, that writes rules for broker-dealers, banks, and municipal advisors transacting municipal securities business, including municipal fund securities.

The federal statute that created the MSRB, requires brokers, dealers, and municipal advisors to register with the SEC and comply with MSRB rules, and gives the SEC oversight of the municipal securities market.

A provision exempting municipal securities, including municipal fund securities, from registration under the Securities Act of 1933, although antifraud liability and disclosure obligations still apply to their sale.

The MSRB rule setting qualification standards for municipal securities personnel, including the Series 51 license required to represent a firm in municipal fund securities transactions and the principal qualifications for supervisors.

The MSRB recordkeeping rule requiring broker-dealers to make and keep specified books and records of municipal securities activity, including customer account records, transaction data, and advertising files.

The MSRB rule governing how long records must be preserved, generally six years for most municipal securities records, with the requirement that they be readily accessible for inspection during the first two years.

The fair dealing rule requiring a dealer to deal fairly with all persons and refrain from deceptive, dishonest, or unfair practices, which for fund securities includes complete and accurate disclosure of fees and material program features.

The suitability rule requiring a dealer to have reasonable grounds to believe a recommendation of municipal fund securities is suitable for the customer, based on the customer's investment profile and the disclosure provided.

The MSRB rule limiting gifts, gratuities, and non-cash compensation given to employees of other firms or to persons connected with municipal securities business, generally capping gifts at $100 per person per year.

The MSRB advertising rule governing how firms may advertise municipal fund securities, requiring fair and balanced presentation, prior principal approval, and retention of the materials used.

The pay-to-play rule that bars a firm from engaging in municipal securities business with an issuer for two years after certain political contributions to officials of that issuer, and imposes related recordkeeping and reporting duties.

The MSRB anti-money laundering rule requiring firms to maintain and enforce a written program reasonably designed to detect, monitor, and report suspicious activity in municipal securities accounts.

The MSRB supervision rule requiring firms to establish, maintain, and test a supervisory system, including written procedures, designated supervisors, and an annual certification, reasonably designed to achieve compliance with MSRB rules.