FINRA Series 54 - Pauline - Quiz 13.new
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Question 1 of 10
1. Question
In connection with an issuance of municipal securities by an issuer, when shall a municipal advisor provide municipal advisory services directly to a conduit borrower?
Correct
If the municipal advisor is retained and compensated by the issuer, a municipal adviser may provide municipal advisory services directly to a conduit borrower. In the first scenario, the MSRB assumes that the municipal advisor does not provide municipal advisory services to the issuer and is retained for services solely to or on behalf of the conduit borrower. Whether a person is a municipal advisor to the issuer, the other person is activity-based and turns on whether the person is providing advice or otherwise engaging in municipal advisory activities for or on behalf of the recipient.
Incorrect
If the municipal advisor is retained and compensated by the issuer, a municipal adviser may provide municipal advisory services directly to a conduit borrower. In the first scenario, the MSRB assumes that the municipal advisor does not provide municipal advisory services to the issuer and is retained for services solely to or on behalf of the conduit borrower. Whether a person is a municipal advisor to the issuer, the other person is activity-based and turns on whether the person is providing advice or otherwise engaging in municipal advisory activities for or on behalf of the recipient.
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Question 2 of 10
2. Question
Under the First Scenario of MSRB Rule G-42, when would the municipal advisor not be required to comply with this rule?
Correct
According to the MSRB Rule G-42, if the activities of the municipal advisor are not interpreted by the SEC, which means the municipal advisor is also a municipal advisor to the issuer, then the municipal advisor would not be required to comply with this rule. This includes not requiring to provide disclosures of interest, if any existed, to the issuer. Even though compensation is not a factor in determining whether a person is a municipal advisor to the issuer or conduit borrower, the conflict must still be disclosed fully and fairly.
Incorrect
According to the MSRB Rule G-42, if the activities of the municipal advisor are not interpreted by the SEC, which means the municipal advisor is also a municipal advisor to the issuer, then the municipal advisor would not be required to comply with this rule. This includes not requiring to provide disclosures of interest, if any existed, to the issuer. Even though compensation is not a factor in determining whether a person is a municipal advisor to the issuer or conduit borrower, the conflict must still be disclosed fully and fairly.
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Question 3 of 10
3. Question
What shall be considered by the municipal advisor if the compensation paid by the issuer is not viewed as an actual material conflict of interest?
Correct
Even if the compensation paid by the issuer is not viewed as an “actual” material conflict of interest by the municipal advisor, the municipal advisor is responsible for carefully examining if such payments give rise to a “potential” material conflict of interest. This happens when the issuer gives payments to the municipal advisor, it may create a relationship between the two parties even if it is not a municipal-advisor relationship. In that case, it would give rise to a potential material conflict of interest that could reasonably be anticipated to impair the advisor’s ability to provide advice in accordance with the MSRB Rule G-42 standards.
Incorrect
Even if the compensation paid by the issuer is not viewed as an “actual” material conflict of interest by the municipal advisor, the municipal advisor is responsible for carefully examining if such payments give rise to a “potential” material conflict of interest. This happens when the issuer gives payments to the municipal advisor, it may create a relationship between the two parties even if it is not a municipal-advisor relationship. In that case, it would give rise to a potential material conflict of interest that could reasonably be anticipated to impair the advisor’s ability to provide advice in accordance with the MSRB Rule G-42 standards.
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Question 4 of 10
4. Question
For the purposes of the MSRB Rule G-40, how does the distribution of form letters take place?
Correct
According to the MSRB Rule G-40, the form letter is distributed to more than 25 persons within any period of 90 consecutive days. The form letter means any written letter or electronic mail message distributed with the mentioned period. All notices, circular, report, market letter, form letter, telemarketing script, seminar text, and press releases are included in the promotional literature distributed or made generally available to municipal entities, obligated persons, municipal advisory clients, or the public.
Incorrect
According to the MSRB Rule G-40, the form letter is distributed to more than 25 persons within any period of 90 consecutive days. The form letter means any written letter or electronic mail message distributed with the mentioned period. All notices, circular, report, market letter, form letter, telemarketing script, seminar text, and press releases are included in the promotional literature distributed or made generally available to municipal entities, obligated persons, municipal advisory clients, or the public.
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Question 5 of 10
5. Question
Which of the following is correct regarding the general standard for advertisements by the municipal advisors under the MSRB Rule G-40?
Correct
The general standard for advertisements is that no municipal advisor shall publish or disseminate any advertisement relating to municipal financial products that contain untrue or misleading statements. All other statements above are under “content standards” rather than the general standards. This standard is subject to further requirements of this rule relating to professional advertisements. Professional advertisements concern the facilities or skills with respect to the activities of the municipal advisor.
Incorrect
The general standard for advertisements is that no municipal advisor shall publish or disseminate any advertisement relating to municipal financial products that contain untrue or misleading statements. All other statements above are under “content standards” rather than the general standards. This standard is subject to further requirements of this rule relating to professional advertisements. Professional advertisements concern the facilities or skills with respect to the activities of the municipal advisor.
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Question 6 of 10
6. Question
Which of the following best describes a professional advertisement as stated under the MSRB Rule G-40?
Correct
Advertisement concerning the facilities, services, or skills with respect to the municipal advisory activities of the municipal advisor or of another municipal advisor is professional advertisements. For the professional advertisement, there are certain standards to be followed stated in the MSRB Rule G-40 which is similar to the general standard for advertisements. Publishing untrue and misleading statements for professional advertisements are also prohibited.
Incorrect
Advertisement concerning the facilities, services, or skills with respect to the municipal advisory activities of the municipal advisor or of another municipal advisor is professional advertisements. For the professional advertisement, there are certain standards to be followed stated in the MSRB Rule G-40 which is similar to the general standard for advertisements. Publishing untrue and misleading statements for professional advertisements are also prohibited.
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Question 7 of 10
7. Question
Which of the following requirements must be submitted by municipal advisors with interactive content in an interactive electronic forum?
Correct
Interactive content that is an advertisement and possibly is posted or disseminated in an interactive electronic forum is exempt from the requirement to be approved in writing by a municipal advisor principal prior to first use. Each advertisement subject to the requirements of MSRB Rule G-40 must be approved in writing by the principal prior to first use. Also, the municipal advisor shall make and keep current in a separate file records of all advertisements.
Incorrect
Interactive content that is an advertisement and possibly is posted or disseminated in an interactive electronic forum is exempt from the requirement to be approved in writing by a municipal advisor principal prior to first use. Each advertisement subject to the requirements of MSRB Rule G-40 must be approved in writing by the principal prior to first use. Also, the municipal advisor shall make and keep current in a separate file records of all advertisements.
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Question 8 of 10
8. Question
How shall the municipal entity be counted as if a municipal advisor were to send a response to an RFP to a municipal entity?
Correct
As to the number of persons for the purposes of MSRB Rule G-40, if a municipal advisor needs to send responses to an RFP to a municipal entity, the municipal entity would be counted as one “person” regardless of the number of employees of the municipal entity may review the response to the RFP. The number of persons for a response to a request for proposal request for qualifications, or similar request as determined at the entity level.
Incorrect
As to the number of persons for the purposes of MSRB Rule G-40, if a municipal advisor needs to send responses to an RFP to a municipal entity, the municipal entity would be counted as one “person” regardless of the number of employees of the municipal entity may review the response to the RFP. The number of persons for a response to a request for proposal request for qualifications, or similar request as determined at the entity level.
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Question 9 of 10
9. Question
What is the supervision of interactive content stated in the MSRB Rule G-40 regarding the advertisement of municipal advisors?
Correct
Under the MSRB Rule G-40, the supervision of interactive content includes implementing and maintaining a system to supervise the municipal advisory activities of the municipal advisor and its associated persons. This includes any municipal advisor activities conducted through the electronic forum that involve interactive content reasonably designed to achieve the compliance of securities laws and regulations include the rules by the Board in the Rule G-44.
Incorrect
Under the MSRB Rule G-40, the supervision of interactive content includes implementing and maintaining a system to supervise the municipal advisory activities of the municipal advisor and its associated persons. This includes any municipal advisor activities conducted through the electronic forum that involve interactive content reasonably designed to achieve the compliance of securities laws and regulations include the rules by the Board in the Rule G-44.
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Question 10 of 10
10. Question
What does the MSRB Rule G-17 provide in the conduct of its municipals securities business?
Correct
The MSRB Rule G-17 provides each broker, dealer, and municipal securities to deal fairly with all persons and shall not engage in any deceptive, dishonest, or unfair practices. The Board also adopted amendments to this rule which require that deliveries to customers of issued securities be accompanied by some evidence of the insurance. Complying with the duty of loyalty and duty of care is under the MSRB Rule G-42.
Incorrect
The MSRB Rule G-17 provides each broker, dealer, and municipal securities to deal fairly with all persons and shall not engage in any deceptive, dishonest, or unfair practices. The Board also adopted amendments to this rule which require that deliveries to customers of issued securities be accompanied by some evidence of the insurance. Complying with the duty of loyalty and duty of care is under the MSRB Rule G-42.