FINRA Series 54 - Pauline - Quiz 6.new
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Question 1 of 10
1. Question
What are the three types of successions specified under Rule 15Bal-7 as mentioned in the Final Rule for Registration of Municipal Advisors?
I. Change in the composition of a partnership
II. Change in form of organization
III. Change in the date or state of incorporation
IV. Change from a sole proprietorship to incorporationCorrect
The change in the composition of a partnership, change in form of organization, and change in the date or state of incorporation are three types of successions specified in Rule 15Bal-7. In these succession types, the predecessor must cease the operation as a municipal advisor. It is appropriate to allow the successor to file an amendment to the predecessor’s Form MA because the succession does not typically result in a change of control of the municipal advisor.
Incorrect
The change in the composition of a partnership, change in form of organization, and change in the date or state of incorporation are three types of successions specified in Rule 15Bal-7. In these succession types, the predecessor must cease the operation as a municipal advisor. It is appropriate to allow the successor to file an amendment to the predecessor’s Form MA because the succession does not typically result in a change of control of the municipal advisor.
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Question 2 of 10
2. Question
Why is the certification that the agent for service of process has accepted the designation and appointment necessary?
Correct
The certification that the agent for service of process has accepted the designation and appointment is needed in ensuring effective service of process upon a non-resident general partner or managing agent of a municipal advisor, or non-resident natural person associated with the municipal advisor or engaged in municipal advisory activities on their behalf. This would lessen the burden imposed on municipal advisors to obtain the signature of the U.S. agent for service of process as believed by the Commission.
Incorrect
The certification that the agent for service of process has accepted the designation and appointment is needed in ensuring effective service of process upon a non-resident general partner or managing agent of a municipal advisor, or non-resident natural person associated with the municipal advisor or engaged in municipal advisory activities on their behalf. This would lessen the burden imposed on municipal advisors to obtain the signature of the U.S. agent for service of process as believed by the Commission.
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Question 3 of 10
3. Question
Which of the following statements is correct regarding the advice standard under Section 15Ba1-1 of the Securities Exchange Act?
Correct
As per the advice standard under Section 15Ba1-1 of the Securities Exchange Act, the advice excludes information that does not involve a recommendation regarding municipal financial products or issuance of municipal securities. This includes structure, timing, terms, and other similar matters concerning such financial products or issues. A recommendation must always involve information regarding municipal financial products or the issuance of municipal securities as it is provided in the Rule.
Incorrect
As per the advice standard under Section 15Ba1-1 of the Securities Exchange Act, the advice excludes information that does not involve a recommendation regarding municipal financial products or issuance of municipal securities. This includes structure, timing, terms, and other similar matters concerning such financial products or issues. A recommendation must always involve information regarding municipal financial products or the issuance of municipal securities as it is provided in the Rule.
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Question 4 of 10
4. Question
Which of the following is under the special rule for separately identifiable departments or divisions of banks for municipal advisory purposes?
Correct
As per the special rule for separately identifiable departments or divisions of banks for municipal advisory purposes, all of the records relating to the bank’s municipal advisory activities are separately maintained in such a unit’s own facilities or the facilities of the bank. These records are maintained to permit independent examination and enforcement of applicable provisions in this Act.
Incorrect
As per the special rule for separately identifiable departments or divisions of banks for municipal advisory purposes, all of the records relating to the bank’s municipal advisory activities are separately maintained in such a unit’s own facilities or the facilities of the bank. These records are maintained to permit independent examination and enforcement of applicable provisions in this Act.
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Question 5 of 10
5. Question
Which of the following is first required in Form MA according to the Final Rule for the Registration of Municipal Advisors?
Correct
The first requirement in filing Form MA is to indicate whether it is submitting the form for initial registration as a municipal advisor or it is just an annual update or an amendment to registration as a municipal advisor. After the submission of the initial form, the most recently submitted version will appear when a filer enters it into the system. The filer would only need to amend the outdated information during the filing.
Incorrect
The first requirement in filing Form MA is to indicate whether it is submitting the form for initial registration as a municipal advisor or it is just an annual update or an amendment to registration as a municipal advisor. After the submission of the initial form, the most recently submitted version will appear when a filer enters it into the system. The filer would only need to amend the outdated information during the filing.
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Question 6 of 10
6. Question
Which of the following is a requirement to be filed under the Items 1-A and 1-B of Form MA?
Correct
It is adopted in the Final Rule for the Registration of Municipal Advisors to indicate the full legal name of the municipal advisor or the name under which it primarily conducts its municipal advisor-related business, if different. The municipal advisor’s CRD Number shall also be seen in the Item 1-A of Form MA if it has one. On the other hand, in Item 1-C, the Employer Identification Number is provided, or the social security number in the absence of Employer Identification Number.
Incorrect
It is adopted in the Final Rule for the Registration of Municipal Advisors to indicate the full legal name of the municipal advisor or the name under which it primarily conducts its municipal advisor-related business, if different. The municipal advisor’s CRD Number shall also be seen in the Item 1-A of Form MA if it has one. On the other hand, in Item 1-C, the Employer Identification Number is provided, or the social security number in the absence of Employer Identification Number.
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Question 7 of 10
7. Question
Which of the following are correct regarding the benefits of the final rules and forms under the Registration of Municipal Advisors?
I. It increases the amount of information available about municipal advisors relevant to the baseline.
II. It enhances the ability of securities regulator to oversee municipal advisors.
III. It provides disciplinary histories and potential conflicts of interests.
IV. It assesses the information made to the public with not disclosures of disciplinary history.Correct
According to the Final Rule for the Registration of Municipal Advisors, the benefits of the final rules and forms are to increase the amount of publicly available information about municipal advisors and enhance the ability of securities regulators to oversee municipal advisors. This would require the municipal advisors to provide disciplinary history and potential conflicts of interest. The information which would be useful in assessing conflicts of interest is also necessary for the rule and forms.
Incorrect
According to the Final Rule for the Registration of Municipal Advisors, the benefits of the final rules and forms are to increase the amount of publicly available information about municipal advisors and enhance the ability of securities regulators to oversee municipal advisors. This would require the municipal advisors to provide disciplinary history and potential conflicts of interest. The information which would be useful in assessing conflicts of interest is also necessary for the rule and forms.
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Question 8 of 10
8. Question
Which of the following statements are correct regarding the economic analysis under the Final Rule for the Registration of Municipal Advisors?
I. The types of persons that should be regulated as municipal advisors are indicated in the economic analysis.
II. The rules on not imposing unnecessary or inappropriate costs and burdens on municipal advisors are under the economic analysis.
III. The economic analysis involves state-registered investment advisers registering as brokers or dealers for another entity.
IV. The Commission has considered the economic costs of the proposed permanent registration regime.Correct
Under the economic analysis of the Final Rule for the Registration of Municipal Advisors, the type of persons that should be regulated as municipal advisors are given. The rules on not imposing unnecessary costs are also indicated in the economic analysis. The economic costs have been considered by the Commission of the proposed permanent registration regime. The Commission has been very sensitive when it comes to the costs and benefits of the rules, therefore, economic analysis is used to detect the burdens on municipal advisors.
Incorrect
Under the economic analysis of the Final Rule for the Registration of Municipal Advisors, the type of persons that should be regulated as municipal advisors are given. The rules on not imposing unnecessary costs are also indicated in the economic analysis. The economic costs have been considered by the Commission of the proposed permanent registration regime. The Commission has been very sensitive when it comes to the costs and benefits of the rules, therefore, economic analysis is used to detect the burdens on municipal advisors.
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Question 9 of 10
9. Question
Which of the following is considered to be within the scope of the underwriting exclusion?
I. Advice regarding manufacturing order periods and institutional marketing only
II. Preparations for investor “road shows” and investor discussions related to the issuance being underwritten
III. Preparation of rating strategies and presentations related to the issuance being underwritten
IV. Advice regarding the structure, timing, and terms concerning a particular issuance of municipal securities.Correct
The Commission has considered the following to be within the scope of the underwriting exclusion: (1) preparations for the investor “roadshows” and discussions related to the issuance being underwritten, (2) preparation of rating strategies related to the issuance being underwritten, and (3) advice regarding structure, timing, and terms concerning the issuance of a municipal security. Structuring of refunding escrow cash flow, preparation of post-sale reports, assistance in the preparation of statements for the municipal securities, and assistance with closing the issuance of municipal securities are also under the underwriting exclusion.
Incorrect
The Commission has considered the following to be within the scope of the underwriting exclusion: (1) preparations for the investor “roadshows” and discussions related to the issuance being underwritten, (2) preparation of rating strategies related to the issuance being underwritten, and (3) advice regarding structure, timing, and terms concerning the issuance of a municipal security. Structuring of refunding escrow cash flow, preparation of post-sale reports, assistance in the preparation of statements for the municipal securities, and assistance with closing the issuance of municipal securities are also under the underwriting exclusion.
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Question 10 of 10
10. Question
What are the transactions that are generally involved by a broker-dealer acting as a dealer-manager for an exchange offer?
I. The purchase of one security in the tender offer
II. The underwriting of a particular issuance of municipal securities in exchange for such tendered securities
III. The purchase of securities from another broker-dealer
IV. The purchase of options and swaps from the municipal advisorsCorrect
For the broker-dealer acting as a dealer-manager for an exchange offer, they would generally involve transactions such as (1) the purchase of one security in the tender offer, and (2) the underwriting of a particular issuance of municipal securities in exchange for such tendered securities. The purchase itself is not an advisory activity and the underwriting of the new issue of municipal securities, therefore, it will be excluded under the underwriter exclusion.
Incorrect
For the broker-dealer acting as a dealer-manager for an exchange offer, they would generally involve transactions such as (1) the purchase of one security in the tender offer, and (2) the underwriting of a particular issuance of municipal securities in exchange for such tendered securities. The purchase itself is not an advisory activity and the underwriting of the new issue of municipal securities, therefore, it will be excluded under the underwriter exclusion.