FINRA Series 54 - Pauline - Quiz 2.new
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Question 1 of 10
1. Question
Who of the following is not included in the exemptions and exclusions from the definition of a municipal advisor according to the Exchange Act Section 15B?
Correct
Under the Registration of Municipal Advisors by the Securities and Exchange Commission, the following are certain exclusions and exemptions from being a municipal advisor: (1) Public officials and employees of municipal entities and obligated persons, (2) registered commodity trading advisors and swap dealers, (3) a municipal entity or obligated person represented by an independent municipal advisor, (4) accountants, attorneys, engineers, and other professionals, and (5) banks. The municipal advisor is engaged in municipal advisory activities in a variety of contexts, such as the financial advisor.
Incorrect
Under the Registration of Municipal Advisors by the Securities and Exchange Commission, the following are certain exclusions and exemptions from being a municipal advisor: (1) Public officials and employees of municipal entities and obligated persons, (2) registered commodity trading advisors and swap dealers, (3) a municipal entity or obligated person represented by an independent municipal advisor, (4) accountants, attorneys, engineers, and other professionals, and (5) banks. The municipal advisor is engaged in municipal advisory activities in a variety of contexts, such as the financial advisor.
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Question 2 of 10
2. Question
According to the SEC Registration of Municipal Advisors, which of the following best describes the solicitation of a municipal entity or obligated person?
Correct
The “solicitation of a municipal entity or obligated person” refers to the solicitations on behalf of a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser that is either not under common control, or does not control the person undertaking such solicitation. The person on behalf of affiliated entities would not be included in the definition of a municipal adviser, where they would not be required to register pursuant to Section 15B of the Exchange Act. One of its examples is a person who makes direct or indirect communication with a municipal entity or obligated person on behalf of a broker or dealer, where the communication is to retain the engagement of such broker or dealer with the issuance of municipal securities.
Incorrect
The “solicitation of a municipal entity or obligated person” refers to the solicitations on behalf of a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser that is either not under common control, or does not control the person undertaking such solicitation. The person on behalf of affiliated entities would not be included in the definition of a municipal adviser, where they would not be required to register pursuant to Section 15B of the Exchange Act. One of its examples is a person who makes direct or indirect communication with a municipal entity or obligated person on behalf of a broker or dealer, where the communication is to retain the engagement of such broker or dealer with the issuance of municipal securities.
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Question 3 of 10
3. Question
By registering as a municipal advisor, what shall be complied by the registrants pursuant to the SEC Registration of Municipal Advisors?
Correct
The requirements in the registration of municipal are to comply with all federal securities laws and rules or regulations promulgated, including the requirements with MSRB rules applied for municipal advisors. This requirement is stated in the SEC Registration of Municipal Advisors. In this section, the definition of municipal advisors has been stated as the guide for the municipal advisors’ registrants. It also indicates the exclusions from the definition of municipal advisor prior to the registration of municipal advisors. The Commission also includes activities within the scope of municipal advisory activities consistent with the Exchange Act.
Incorrect
The requirements in the registration of municipal are to comply with all federal securities laws and rules or regulations promulgated, including the requirements with MSRB rules applied for municipal advisors. This requirement is stated in the SEC Registration of Municipal Advisors. In this section, the definition of municipal advisors has been stated as the guide for the municipal advisors’ registrants. It also indicates the exclusions from the definition of municipal advisor prior to the registration of municipal advisors. The Commission also includes activities within the scope of municipal advisory activities consistent with the Exchange Act.
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Question 4 of 10
4. Question
How shall “free or voluntary” offers be treated according to the commenters for the Municipal Securities Advisory Services?
Correct
According to the commenters in the SEC Registration of Municipal Advisors, free or voluntary Municipal Securities Advisory Services should not be exempted from the registration of municipal advisors. Advisors similar to this case shall not be permitted to avoid registration and fiduciary responsibilities.
Incorrect
According to the commenters in the SEC Registration of Municipal Advisors, free or voluntary Municipal Securities Advisory Services should not be exempted from the registration of municipal advisors. Advisors similar to this case shall not be permitted to avoid registration and fiduciary responsibilities.
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Question 5 of 10
5. Question
Which of the following is not included in the new tailored exemption from the definition of municipal advisor for a bank?
Correct
Under the Final Rule for Registration of Municipal Advisors, the following are the information under the new tailored exemption from the definition of municipal advisor for a bank providing advice: (1) Any investments held in a deposit account or other instruments issued by a bank, (2) Any funds held in a sweep account, (3) any investment acting in the capacity of an indenture trustee made by a bank, and (4) any extension of credit by a bank to a municipal entity or obligated person. Similar capacities investment includes bond indenture trustee, paying agent, or municipal escrow agent.
Incorrect
Under the Final Rule for Registration of Municipal Advisors, the following are the information under the new tailored exemption from the definition of municipal advisor for a bank providing advice: (1) Any investments held in a deposit account or other instruments issued by a bank, (2) Any funds held in a sweep account, (3) any investment acting in the capacity of an indenture trustee made by a bank, and (4) any extension of credit by a bank to a municipal entity or obligated person. Similar capacities investment includes bond indenture trustee, paying agent, or municipal escrow agent.
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Question 6 of 10
6. Question
Which of the following statements are correct regarding the final rule for the Registration of Municipal Advisors?
I. This rule preserves the registration of municipal advisor’s requirements for banks in engaging in municipal advisory activities.
II. This rule does not preserve any requirements for banks in the engagement in municipal advisory activities.
III. This rule preserves the municipal advisor’s requirements for banks in providing advice with respect to municipal derivatives.
IV. This rule does not preserve any requirements for banks in providing advice with respect to municipal derivatives and other banking instruments.Correct
According to the final rule for the Registration of Municipal Advisors, its purpose is to preserve the registration of municipal advisor’s requirements for banks in engaging in municipal advisory activities, and for banks in providing advice with respect to municipal derivatives. Municipal advisory activities include banks that act as financial advisors to municipal entities in structuring issues of municipal securities. It is also stated that the Dodd-Frank Act did not specifically define what “constitutes “advice” to a municipal entity or obligated person.
Incorrect
According to the final rule for the Registration of Municipal Advisors, its purpose is to preserve the registration of municipal advisor’s requirements for banks in engaging in municipal advisory activities, and for banks in providing advice with respect to municipal derivatives. Municipal advisory activities include banks that act as financial advisors to municipal entities in structuring issues of municipal securities. It is also stated that the Dodd-Frank Act did not specifically define what “constitutes “advice” to a municipal entity or obligated person.
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Question 7 of 10
7. Question
According to the final rule for Registration of Municipal Advisors, which of these exempt persons providing advice with respect to municipal financial products or the issuance of municipal securities?
I. Such a person is subject to the statutory fiduciary duty applicable to municipal advisors under the Exchange Act.
II. An independent registered municipal advisor is providing advice with respect to the same aspects of municipal financial products is registered pursuant to Section 15B of the Exchange Act and is not associated with the person seeking to rely on this exemption.
III. Such a person receives representation from the municipal entity and will rely on the advice of an independent registered municipal advisor.
IV. Such person provides a copy of written disclosure that is not a municipal advisor and not subject to the statutory fiduciary duty applicable to municipal advisors.Correct
The final rule exempt persons in providing advice regarding the municipal financial products or the issuance of municipal securities as (1) an independent registered municipal advisor providing advice regarding municipal financial products and is not associated with the person seeking to rely on this exemption within at least past two years, (2) such person receives representation from an obligated person, in writing, with the advice of a municipal advisor, and (3) such person provides written disclosures to the municipal entity or obligated person that is not a municipal advisor. This person shall provide a copy of the disclosure to the municipal entity’s independent registered municipal advisor.
Incorrect
The final rule exempt persons in providing advice regarding the municipal financial products or the issuance of municipal securities as (1) an independent registered municipal advisor providing advice regarding municipal financial products and is not associated with the person seeking to rely on this exemption within at least past two years, (2) such person receives representation from an obligated person, in writing, with the advice of a municipal advisor, and (3) such person provides written disclosures to the municipal entity or obligated person that is not a municipal advisor. This person shall provide a copy of the disclosure to the municipal entity’s independent registered municipal advisor.
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Question 8 of 10
8. Question
In the final rule for the Registration of Municipal Advisors, a commenter expressed concern that a person must register regardless of the type of swap advice. Which of the following did they urge to consider an exclusion basis?
I. Neither the types of relationships between the municipal entity and the person providing the advice and the types of swaps
II. The types of relationships between the municipal entity and the person who is providing the advice
III. The types of swaps, specifically limiting municipal derivatives to securities-based swaps
IV. Type of swap advice that may not be contemplated of the relationship between the municipal entity and person seeking to offer adviceCorrect
The commenter in the final rule stated that exemptions are made to help distinguish between entities whose principal is to be a municipal advisor and others. These exclusions are based on both: (1) types of swaps, and (2) types of relationships between the municipal entity and the person who is providing the advice. The types of swaps specifically limit municipal derivatives to securities-based swaps. On the other hand, the type of relationships between the municipal entity and the person who is providing the advice specifically provides an exclusion where the advisor is an agent and fiduciary of the municipal entity.
Incorrect
The commenter in the final rule stated that exemptions are made to help distinguish between entities whose principal is to be a municipal advisor and others. These exclusions are based on both: (1) types of swaps, and (2) types of relationships between the municipal entity and the person who is providing the advice. The types of swaps specifically limit municipal derivatives to securities-based swaps. On the other hand, the type of relationships between the municipal entity and the person who is providing the advice specifically provides an exclusion where the advisor is an agent and fiduciary of the municipal entity.
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Question 9 of 10
9. Question
What are the examples of services in this broader category of attest services, all of which it believed would be subject to professional standards?
I. Review of debt coverage requirements on outstanding bonds and verification of calculations of escrow account requirements
II. Examinations, but not compilations and agreed-upon procedures engagements on projections or forecasts.
III. Performance of other types of agreed-upon procedures engagements
IV. Compliance audits synch as the opinions on compliance with federal, state, or local compliance requirementsCorrect
A commenter in the final rule stated examples of services in this broader category of attest services. These include (1) examinations, compilations, or agreed-upon procedures engagements on projections or forecasts using the Statements on Standards for Attestation Engagements, (2) performance of other types of agreed-upon procedures engagements, (3) compliance audits, and (4) review of debt coverage requirements. Compliance audits are the opinions on compliance with federal, state, or local compliance requirements. Another commenter stated that audit services are subject to similar professional standards, including the “independence” requirement.
Incorrect
A commenter in the final rule stated examples of services in this broader category of attest services. These include (1) examinations, compilations, or agreed-upon procedures engagements on projections or forecasts using the Statements on Standards for Attestation Engagements, (2) performance of other types of agreed-upon procedures engagements, (3) compliance audits, and (4) review of debt coverage requirements. Compliance audits are the opinions on compliance with federal, state, or local compliance requirements. Another commenter stated that audit services are subject to similar professional standards, including the “independence” requirement.
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Question 10 of 10
10. Question
Which of the following are asked by the commenter of the Registration of Municipal Advisors’ Final Rule to be included or excluded from the accountant exemption?
I. The provision of annual independent audits of a municipal entity
II. The review and preparation of pro forma maturity schedules of principal and interest on proposed bond issues
III. The preparation of the “backend” of offering statements and financial and demographic information
IV. The provision of budget, audit, and other information to credit rating agenciesCorrect
In the final rule for Registration of Municipal Advisors, one commenter has requested for the inclusion and exclusions of the following: (1) the preparation of unaudited annual financial statements, (2) the provision of annual independent audits of a municipal entity, (3) the review and preparation of pro forma maturity schedules of principal and interest on proposed bond issues, (4) the preparation of “front end” of financial information, and (5) the provision of budget, audit, and credit rating agencies’ information. An extension for the exemption to services is also recommended by several commenters.
Incorrect
In the final rule for Registration of Municipal Advisors, one commenter has requested for the inclusion and exclusions of the following: (1) the preparation of unaudited annual financial statements, (2) the provision of annual independent audits of a municipal entity, (3) the review and preparation of pro forma maturity schedules of principal and interest on proposed bond issues, (4) the preparation of “front end” of financial information, and (5) the provision of budget, audit, and credit rating agencies’ information. An extension for the exemption to services is also recommended by several commenters.