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Series 53 study materials
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Series 53 practice questions

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Question 1Supervision of Municipal Securities Activities

A municipal securities principal is drafting written supervisory procedures for the firm's municipal securities activities. Those procedures must be reasonably designed to achieve which result?

  1. Replacement of the annual compliance review
  2. Elimination of all customer complaints
  3. Compliance with applicable MSRB rules and securities laws Correct answer.
  4. Guarantee that every trade is profitable

Explanation

Written supervisory procedures must be reasonably designed to achieve compliance with MSRB rules and applicable securities laws. They guide review, escalation, and documentation but do not guarantee business outcomes.

Question 2Supervision of Municipal Securities Activities

Who is responsible for supervising the day-to-day municipal securities activities of a broker-dealer?

  1. A municipal securities principal designated by the firm Correct answer.
  2. The issuer's finance director
  3. The firm's outside legal counsel
  4. Any registered representative with five years of experience

Explanation

MSRB supervision rules require a firm to designate a municipal securities principal to supervise municipal securities activities. The role cannot be left to unregistered or external persons.

Question 3Supervision of Municipal Securities Activities

A customer complains about a municipal securities transaction. A municipal securities principal should ensure the complaint is:

  1. Ignored if the trade was profitable
  2. Deleted after the customer is paid
  3. Forwarded only to the issuer
  4. Recorded, investigated, and resolved under firm procedures Correct answer.

Explanation

Customer complaints must be centrally logged, reviewed, and resolved in accordance with firm procedures. The principal oversees investigation and any corrective action.

Question 4Supervision of Municipal Securities Activities

The regulatory element of continuing education for a registered municipal securities representative is generally required:

  1. Only when the representative changes firms
  2. Beginning in the second year after registration and every three years thereafter Correct answer.
  3. Every year after registration
  4. Only after a customer complaint

Explanation

The regulatory element is generally due within 120 days of the second anniversary of registration and every three years after that. It is separate from any firm element training.

Question 5Supervision of Municipal Securities Activities

Under MSRB Rule G-20, the annual limit on gifts given to an employee of a customer or other person is:

  1. $100 per person Correct answer.
  2. $250 per person
  3. $500 per person
  4. $1,000 per person

Explanation

MSRB Rule G-20 generally limits gifts and gratuities to $100 per person per year, subject to certain exceptions. The limit is designed to prevent improper influence.

Question 6Supervision of Municipal Securities Activities

A municipal finance banker makes a prohibited political contribution to an official of a municipal issuer. Under MSRB Rule G-37, the firm generally may not:

  1. Sell the issuer's bonds in the secondary market
  2. Underwrite bonds for any other issuer for one year
  3. Engage in municipal securities business with that issuer for two years Correct answer.
  4. Provide research reports to that issuer

Explanation

A prohibited contribution generally triggers a two-year ban on municipal securities business with the issuer. The ban targets underwriting and financial advisory work, not ordinary secondary-market trading.

Question 7Supervision of Municipal Securities Activities

When reviewing a retail municipal securities trade for fair pricing, a principal should assess whether the firm's markup over the prevailing market price is:

  1. Reasonable in light of the services provided and market conditions Correct answer.
  2. Identical for every customer
  3. Approved by the issuer
  4. Disclosed only after settlement

Explanation

MSRB fair-pricing standards require markups to be fair and reasonable in relation to the prevailing market price and the services provided. The principal should review the facts and circumstances of the trade.

Question 8Supervision of Municipal Securities Activities

Under MSRB Rule G-9, municipal securities transaction records generally must be preserved for:

  1. Six years, with the first two years easily accessible Correct answer.
  2. One year, with no accessibility requirement
  3. Three years, all in paper form
  4. Five years, only at the main office

Explanation

MSRB recordkeeping rules generally require preservation of municipal securities records for six years. The first two years of records must be easily accessible.

Question 9Supervision of Municipal Securities Activities

A principal reviews a representative's recommendation of a long-term, lower-rated municipal revenue bond to an elderly customer with limited income and a short investment horizon. The principal should focus primarily on whether the recommendation:

  1. Is suitable for the customer's objectives and financial situation Correct answer.
  2. Produces the highest markup for the firm
  3. Matches the firm's current inventory
  4. Was cleared by the issuer

Explanation

MSRB suitability standards require a recommendation to be suitable for the particular customer based on investment objectives, financial situation, and needs. The principal should evaluate customer-specific suitability, not the firm's inventory or markup.

Question 10Supervision of Municipal Securities Activities

A registered municipal securities representative wants to serve as a paid consultant to a municipal advisor. Before engaging in the activity, the representative must:

  1. Notify the MSRB within 30 days
  2. Obtain the firm's written approval Correct answer.
  3. Surrender the representative's registration
  4. Obtain the issuer's consent

Explanation

Outside business activities require prior written notice to, and approval by, the employing firm. Supervision ensures the activity does not create conflicts or violate rules.

Question 11Supervision of Municipal Securities Activities

A municipal securities principal is planning the firm's annual compliance meeting. The meeting should:

  1. Address relevant regulatory requirements and supervisory issues and be documented Correct answer.
  2. Be limited to sales performance figures
  3. Be attended only by newly hired representatives
  4. Replace the firm's written supervisory procedures

Explanation

The annual compliance meeting should cover relevant regulatory and supervisory topics and be documented. It is a training and reinforcement tool, not a replacement for written procedures or review.

Question 12Supervision of Municipal Securities Activities

A firm's supervisory control system for municipal securities activities should be reviewed:

  1. Only when a customer complaint is filed
  2. At least annually, with a report of the review Correct answer.
  3. Every five years by the issuer
  4. Only after a regulatory examination

Explanation

Firms should review the supervisory control system at least annually and document the review. The review evaluates whether procedures remain reasonably designed to achieve compliance.

Question 13Supervision of Municipal Securities Activities

A principal reviewing outgoing retail communications about municipal securities should ensure the communications:

  1. Are approved by the issuer before use
  2. Include a guarantee of principal
  3. List only the firm's most profitable bonds
  4. Are fair and balanced and do not omit material facts Correct answer.

Explanation

Retail communications must be fair and balanced and must not omit material facts. The principal reviews content for accuracy and compliance with advertising standards.

Question 14Supervision of Municipal Securities Activities

When allocating a new issue of municipal bonds among customer orders, a principal should ensure that the allocation is:

  1. Limited to institutional accounts
  2. Consistent with disclosed procedures and fair to all customers Correct answer.
  3. Based on the representative's seniority
  4. Changed after the bonds trade

Explanation

Allocations must follow disclosed procedures and treat customers fairly. The principal should identify preferential treatment or deviations from the firm's stated allocation policy.

Question 15Supervision of Municipal Securities Activities

A municipal securities principal's oversight of the firm's anti-money-laundering program should include:

  1. Monitoring for suspicious activity and ensuring required reports are filed Correct answer.
  2. Setting the issuer's bond yields
  3. Approving customer tax returns
  4. Reviewing only the firm's marketing materials

Explanation

Supervisory oversight of the AML program includes monitoring for suspicious activity and ensuring required reports, such as suspicious activity reports, are filed. The principal should escalate red flags.

Question 16Supervision of Municipal Securities Activities

A firm opens a new branch office that will conduct municipal securities business. The principal should ensure the branch:

  1. Is supervised only by the issuer
  2. Operates without any supervisory review for one year
  3. Has appropriate supervisory coverage and is included in the inspection program Correct answer.
  4. Uses the same registered representative as the main office

Explanation

New branches must be brought within the firm's supervisory and inspection framework. The principal should confirm adequate coverage, procedures, and review.

Question 17Supervision of Municipal Securities Activities

Under MSRB Rule G-37, a contribution to an issuer official may fall within the de minimis exception if the contributor:

  1. Makes the contribution through a political action committee
  2. Is a municipal advisor rather than a broker-dealer
  3. Is entitled to vote for that official and the contribution does not exceed $250 per election Correct answer.
  4. Makes the contribution more than two years before a bond sale

Explanation

The de minimis exception permits a contribution of up to $250 per election if the contributor is entitled to vote for the official. Contributions outside that exception can trigger the two-year business ban.

Question 18Supervision of Municipal Securities Activities

Which record must a municipal securities broker-dealer maintain under MSRB Rule G-8?

  1. Only employee résumés
  2. Records of municipal securities transactions, including customer and price information Correct answer.
  3. Only marketing brochures
  4. Only issuer annual financial statements

Explanation

MSRB books-and-records rules require records of municipal securities transactions, including customer, price, and other trade details. These records support supervisory review and regulatory examination.

Question 19Supervision of Municipal Securities Activities

During a negotiated municipal bond offering with a retail order period, a principal should ensure that retail orders:

  1. Are allocated by the issuer's finance director
  2. Are filled only after institutional orders
  3. Are prohibited from receiving allocations
  4. Receive priority as described in the offering documents Correct answer.

Explanation

A retail order period gives retail orders priority in accordance with the offering documents. The principal should confirm that allocations follow the disclosed priority and are documented.

Question 20Supervision of Municipal Securities Activities

A municipal securities principal may delegate supervisory tasks to another qualified person, but the principal remains responsible for:

  1. Ensuring that delegated tasks are performed properly Correct answer.
  2. Personally reviewing every trade
  3. Approving the issuer's official statement
  4. Setting the firm's compensation plan

Explanation

A principal may delegate tasks but cannot delegate ultimate supervisory responsibility. The principal must ensure delegated tasks are performed and documented properly.

Question 21Supervision of Municipal Securities Activities

MSRB Rule G-37's restrictions on political contributions also apply to contributions made to:

  1. The issuer's bond counsel
  2. Bond ballot campaigns Correct answer.
  3. The firm's clearing broker
  4. A municipal advisor's clients

Explanation

G-37 addresses pay-to-play concerns involving issuer officials and bond ballot campaigns. Contributions to bond ballot campaigns can therefore affect the firm's ability to conduct municipal securities business.

Question 22Supervision of Municipal Securities Activities

A principal reviews a municipal securities trade executed on a riskless principal basis. To assess fair pricing under MSRB Rule G-30, the principal should compare the customer's price to:

  1. The prevailing market price at the time of the transaction Correct answer.
  2. The issuer's original offering price
  3. The firm's cost of funds
  4. The representative's commission schedule

Explanation

Fair-pricing review focuses on the prevailing market price at the time of the transaction. The principal assesses whether the customer's price, including any markup, is fair and reasonable.

Question 23Supervision of Municipal Securities Activities

A firm supervises sales of municipal fund securities, such as 529 plans. A principal should recognize that these securities are:

  1. Covered only by the Investment Company Act of 1940
  2. Exempt from MSRB rules because they are not traditional bonds
  3. Subject to MSRB rules, including fair dealing and supervision requirements Correct answer.
  4. Regulated solely by the issuer

Explanation

Municipal fund securities are municipal securities for MSRB purposes, so MSRB fair-dealing and supervisory requirements apply. The principal must supervise sales with those obligations in mind.

Question 24Supervision of Municipal Securities Activities

Under MSRB Rule G-27, a municipal securities principal's transaction review should be reasonably designed to identify:

  1. Transactions that may violate MSRB rules or firm procedures Correct answer.
  2. Only the firm's most profitable trades
  3. Only trades for institutional customers
  4. Only trades executed on the same day

Explanation

Transaction review should be reasonably designed to detect conduct that may violate MSRB rules or firm procedures. The principal uses the review to follow up on red flags and document action.

Question 25Supervision of Municipal Securities Activities

A principal notices a representative repeatedly selling municipal bonds to customers and then repurchasing them at higher prices shortly afterward. The principal's most appropriate supervisory action is to:

  1. Ignore the pattern because the customers agreed to the trades
  2. Promote the representative for generating revenue
  3. Wait for the MSRB to contact the firm
  4. Investigate the pattern and address potential excessive trading or unsuitable recommendations Correct answer.

Explanation

Repeated short-term trading at higher prices is a red flag for excessive trading or unsuitable recommendations. The principal should investigate, document findings, and take appropriate corrective action.

Question 26Supervision of Municipal Securities Activities

A broker-dealer begins conducting municipal securities business. Under MSRB rules, the firm's supervisory structure must include which of the following?

  1. An outside law firm to approve every trade
  2. At least one person registered as a municipal securities principal Correct answer.
  3. A municipal advisor registered with the SEC
  4. A separate compliance department at each branch office

Explanation

MSRB Rule G-27 requires a broker-dealer conducting municipal securities business to designate at least one municipal securities principal to supervise those activities. The firm's written supervisory procedures must assign supervisory responsibilities to that principal.

Question 27Supervision of Municipal Securities Activities

A representative wants to give a $150 gift to an official of a municipal issuer with whom the firm does business. Under MSRB Rule G-20, the principal should:

  1. Approve the gift if it is accompanied by a business meal
  2. Approve the gift if it is disclosed to the issuer
  3. Prohibit the gift because it exceeds the $100 annual limit Correct answer.
  4. Prohibit the gift only if the official is a candidate

Explanation

Rule G-20 limits gifts and gratuities given to a person in connection with municipal securities business to $100 per person per year. A $150 gift exceeds that limit and should not be approved.

Question 28Supervision of Municipal Securities Activities

A firm makes a contribution to an issuer official that does not qualify for the de minimis exception. Under MSRB Rule G-37, the firm may not engage in municipal securities business with that issuer for:

  1. Six months
  2. One year
  3. Two years Correct answer.
  4. Five years

Explanation

Rule G-37 imposes a two-year ban on engaging in municipal securities business with an issuer after a non-de minimis contribution to an issuer official. The ban applies to the firm and its municipal finance professionals.

Question 29Supervision of Municipal Securities Activities

A municipal securities transaction is executed at 10:00 a.m. Under MSRB Rule G-14, the firm must report the trade to the MSRB's transaction reporting system by:

  1. End of the business day
  2. 10:30 a.m.
  3. Noon
  4. 10:15 a.m. Correct answer.

Explanation

Rule G-14 requires a dealer to report a municipal securities transaction to the MSRB's Real-Time Transaction Reporting System within 15 minutes of execution. Supervisory procedures should ensure timely reporting.

Question 30Supervision of Municipal Securities Activities

A principal is designing the firm's supervisory procedures for municipal securities transaction review under MSRB Rule G-27. The review should be reasonably designed to identify:

  1. Only transactions that exceed $1 million in par value
  2. Excessive trading, unauthorized trading, and other irregular conduct Correct answer.
  3. Only transactions in which the firm acts as agent
  4. Only transactions involving institutional customers

Explanation

Rule G-27 requires supervisory procedures reasonably designed to review municipal securities transactions for irregular conduct, including excessive trading and unauthorized trading. The review is not limited by customer type or trade size.

Question 31Supervision of Municipal Securities Activities

A firm serves as financial advisor to a municipal issuer. The issuer proposes to pay the firm a bonus if the bond issue closes successfully. Under MSRB Rule G-23, the principal should:

  1. Reject it; such compensation may not be contingent on the sale Correct answer.
  2. Reject the arrangement only if the bonus exceeds the $100 gift limit
  3. Accept the arrangement if the bonus is fully disclosed to all investors
  4. Accept the arrangement if the issuer pays the bonus directly to the firm

Explanation

Rule G-23 prohibits a dealer from receiving financial advisory compensation that is contingent on the sale of municipal securities. The prohibition applies regardless of disclosure or who pays the bonus.

Question 32Supervision of Municipal Securities Activities

A firm is underwriting a new issue of municipal bonds and selling the bonds to retail customers. Under MSRB Rule G-32, the principal should ensure that the official statement is delivered to customers:

  1. Only after the issuer approves its final budget
  2. Within 30 days after the trade date
  3. By the settlement date of the transaction Correct answer.
  4. Only if the customer requests a copy in writing

Explanation

Rule G-32 requires a dealer selling new-issue municipal securities to deliver the official statement to the customer by settlement. The principal should have procedures to confirm delivery.

Question 33Supervision of Municipal Securities Activities

A firm is recommending municipal bonds to a customer and the firm has a control relationship with the issuer. Under MSRB Rule G-17, the principal should ensure that the representative:

  1. Reports the relationship to the MSRB before the trade
  2. Discloses the control relationship to the customer Correct answer.
  3. Charges a lower markup because of the relationship
  4. Obtains written consent from the customer before the trade

Explanation

Rule G-17 requires a dealer to disclose a control relationship with the issuer when recommending the issuer's securities. The disclosure allows the customer to evaluate the conflict.

Question 34Supervision of Municipal Securities Activities

Under MSRB Rule G-27, a principal's supervision of municipal securities activities should include review of:

  1. Only written letters, not electronic messages
  2. Only correspondence that mentions a specific bond issue
  3. Incoming and outgoing correspondence, including electronic messages Correct answer.
  4. Only correspondence sent to institutional customers

Explanation

Rule G-27 requires supervisory review of incoming and outgoing correspondence, including electronic messages, relating to municipal securities activities. The review should be designed to detect improper communications.

Question 35Supervision of Municipal Securities Activities

A firm must file Form G-37 with the MSRB to report political contributions and municipal securities business. Under MSRB Rule G-37, the form is generally filed:

  1. Only when the firm makes a reportable contribution
  2. Quarterly, within 30 days after the end of each quarter Correct answer.
  3. Annually, within 90 days after the fiscal year ends
  4. Monthly, within 10 days after the end of each month

Explanation

Rule G-37 requires Form G-37 to be filed quarterly, generally within 30 days after the end of each calendar quarter. The form reports reportable contributions and municipal securities business.

Question 36Supervision of Municipal Securities Activities

A principal is reviewing municipal securities confirmations sent to retail customers. Under MSRB Rule G-15, the confirmations should disclose:

  1. The name of every employee who handled the customer order
  2. The firm's capacity and the amount of any commission Correct answer.
  3. The representative's compensation history for the past year
  4. The issuer's current credit rating and budget forecast

Explanation

Rule G-15 requires customer confirmations to disclose the dealer's capacity and the amount of any commission. These disclosures help the customer understand the transaction costs.

Question 37Supervision of Municipal Securities Activities

A customer sends a written complaint alleging that a representative made unauthorized municipal bond trades. Under MSRB Rule G-27, the principal should:

  1. Wait until the annual compliance meeting to review the complaint
  2. Forward the complaint to the representative without further action
  3. Discard the complaint if the customer later closes the account
  4. Review it, respond to the customer, and keep a record Correct answer.

Explanation

Rule G-27 requires the principal to review and investigate customer complaints, respond to the customer, and maintain records of the complaint and response. Closing the account does not eliminate the obligation.

Question 38Supervision of Municipal Securities Activities

Under MSRB Rule G-37, which person is a 'municipal finance professional' of a broker-dealer?

  1. Any employee who works in the firm's human resources department
  2. An independent contractor who has never solicited municipal business
  3. A sales representative who spends 10% or more of her time on municipal securities business Correct answer.
  4. A customer who buys municipal bonds in a retail account

Explanation

Rule G-37 defines a municipal finance professional to include a person who spends 10% or more of his or her time on municipal securities business, as well as certain principals and supervisors. Human resources staff and customers are not included.

Question 39Supervision of Municipal Securities Activities

A firm is considering a contribution to a political action committee that supports a bond ballot campaign for a municipal issuer. Under MSRB Rule G-37, the principal should recognize that:

  1. They are regulated solely by the Federal Election Commission and not the MSRB
  2. They are permitted without any dollar limitation under the rule
  3. They are prohibited only when the contribution is made in cash rather than check
  4. They are subject to the same prohibitions as issuer-official contributions Correct answer.

Explanation

Rule G-37 extends the pay-to-play restrictions to contributions to bond ballot campaigns, treating them similarly to contributions to issuer officials. A firm should review such contributions before making them.

Question 40Supervision of Municipal Securities Activities

A firm agrees to act as financial advisor to a municipal issuer on a new bond issue. Under MSRB Rule G-23, the principal should ensure that the financial advisory relationship is:

  1. Approved by the MSRB before the firm begins work
  2. Limited to a term of no more than 30 days
  3. Set forth in a written agreement with the issuer Correct answer.
  4. Documented only after the bonds are sold

Explanation

Rule G-23 requires a financial advisory relationship with an issuer to be established in a written agreement. The agreement should define the scope of services and the compensation arrangement.

Question 41Municipal Securities Issuance and Underwriting

In a primary offering of municipal securities, what is the primary purpose of the official statement?

  1. To serve as the legal contract that obligates the issuer to repay the bonds
  2. To give investors information about the issue, issuer, and risks Correct answer.
  3. To certify that the issuer has obtained a bond insurance policy
  4. To set the interest rate that the issuer must pay for the life of the bonds

Explanation

The official statement is the primary disclosure document for a municipal offering. It describes the securities, the issuer, the security for repayment, and material risks so investors can evaluate the investment.

Question 42Municipal Securities Issuance and Underwriting

What is the typical role of bond counsel in a municipal bond issuance?

  1. To opine on validity and tax-exempt status Correct answer.
  2. To prepare the issuer's audited financial statements
  3. To underwrite the bonds and set the initial offering prices
  4. To guarantee repayment of the bonds if the issuer defaults

Explanation

Bond counsel represents the issuer on legal matters and typically renders an opinion that the bonds are valid and, where applicable, tax-exempt. Bond counsel does not underwrite the issue or guarantee repayment.

Question 43Municipal Securities Issuance and Underwriting

In a competitive sale of municipal bonds, how is the underwriter selected?

  1. The MSRB selects the underwriter through a lottery of qualified firms
  2. The issuer negotiates terms with a single underwriter chosen in advance
  3. The syndicate manager assigns the bonds to affiliated dealers
  4. The issuer awards the bonds to the lowest true interest cost bidder Correct answer.

Explanation

In a competitive sale, the issuer solicits sealed bids and awards the issue to the bidder offering the best terms, often measured by lowest true interest cost. The MSRB does not select underwriters, and negotiated sales are handled separately.

Question 44Municipal Securities Issuance and Underwriting

Under MSRB rules, when must an underwriter generally deliver an official statement to a customer buying municipal securities in a primary offering?

  1. Within 90 days after the end of the issuer's fiscal year
  2. By settlement, or with the confirmation if no final OS is ready Correct answer.
  3. Only after the bonds have been rated by a nationally recognized rating agency
  4. Only if the customer requests it in writing after settlement

Explanation

MSRB Rule G-32 addresses official statement delivery in primary offerings. The underwriter generally must provide the official statement by settlement, with limited provisions for delivering it with the confirmation when the final document is not yet available.

Question 45Municipal Securities Issuance and Underwriting

In a negotiated municipal underwriting, what does the agreement among underwriters primarily establish?

  1. The issuer's obligation to maintain a debt service reserve fund
  2. How syndicate members share the offering, allocations, and liability Correct answer.
  3. The trustee's duties for administering bond payments
  4. The bond counsel's fee for issuing its legal opinion

Explanation

The agreement among underwriters governs the relationship among syndicate members, including purchase commitments, allocation procedures, and liability. Issuer covenants and trustee duties are generally set out in other financing documents.

Question 46Municipal Securities Issuance and Underwriting

In a competitive municipal bond sale, what is the purpose of a good-faith deposit submitted with a bid?

  1. To pay the underwriter's management fee before pricing
  2. To prepay the issuer's cost of printing the official statement
  3. To fund the issuer's debt service reserve at closing
  4. To show the bidder's commitment and secure the bid Correct answer.

Explanation

A good-faith deposit demonstrates that the bidder is serious and provides the issuer with security if the bidder fails to perform. It is not the underwriter's compensation or a source of issue proceeds.

Question 47Municipal Securities Issuance and Underwriting

When municipal bonds are insured by a bond insurer, what does the insurance generally provide to bondholders?

  1. Payment of principal and interest if the issuer fails Correct answer.
  2. A guarantee that market interest rates will not rise
  3. A reduction in the bonds' federal income tax exemption
  4. A promise that the issuer will not call the bonds before maturity

Explanation

Bond insurance is a credit enhancement under which the insurer promises to pay scheduled principal and interest if the issuer does not. It does not protect against interest rate movements or control the issuer's call rights.

Question 48Municipal Securities Issuance and Underwriting

What is the primary function of underwriter's counsel in a municipal securities offering?

  1. To provide the credit rating for the issue
  2. To act as the trustee for the bondholders after closing
  3. To represent underwriters and review offering documents Correct answer.
  4. To certify the issuer's official statement as complete under federal securities law

Explanation

Underwriter's counsel represents the underwriting group, reviews the offering documents, and advises on legal and disclosure matters. The firm does not serve as trustee, rating agency, or issuer certifying officer.

Question 49Municipal Securities Issuance and Underwriting

An underwriter learns that a material piece of information in a preliminary official statement is inaccurate before final pricing. Under MSRB fair-dealing standards, what should the underwriter do?

  1. Withhold the information from customers because the issuer controls the official statement
  2. Cancel all municipal underwriting activity for the remainder of the year
  3. Raise it with the issuer and fix the disclosure before sales close Correct answer.
  4. Complete the sale and rely on the issuer's bond counsel opinion as a shield

Explanation

MSRB fair-dealing standards require underwriters to deal fairly with issuers and investors and not to use materially misleading information. The underwriter should raise the issue with the issuer and seek corrected disclosure before completing sales.

Question 50Municipal Securities Issuance and Underwriting

Under MSRB Rule G-32, what must an underwriter generally submit to EMMA in connection with a primary offering?

  1. The names of all retail customers who purchased the bonds
  2. The official statement and related primary market disclosure Correct answer.
  3. The issuer's federal income tax returns
  4. The underwriter's internal trading records for the prior year

Explanation

Rule G-32 requires underwriters to submit the official statement and specified primary market information to EMMA. This supports public availability of offering disclosure for municipal securities.