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Difficulty: EasyMunicipal Securities Rulemaking Board (MSRB) Rules and Scope

Which of the following organizations is responsible for inspecting broker-dealers and enforcing the rules created by the Municipal Securities Rulemaking Board (MSRB)?

  1. Financial Industry Regulatory Authority (FINRA)Answer
  2. B
    Municipal Securities Rulemaking Board (MSRB)
  3. C
    Securities Investor Protection Corporation (SIPC)
  4. D
    Internal Revenue Service (IRS)

Answer

Financial Industry Regulatory Authority (FINRA)
The correct answer is Financial Industry Regulatory Authority (FINRA). The MSRB writes rules governing municipal securities firms and professionals, but it possesses no investigative or enforcement power. For securities broker-dealers, MSRB rules are enforced primarily by FINRA and the SEC.

Step-by-Step Solution

1
Identify the primary role and regulatory limitation of the MSRB.
The MSRB creates rules for municipal securities dealers and municipal advisors, but lacks authority to examine firms or enforce compliance.
The SRO framework explicitly separates MSRB rulemaking from enforcement.
2
Identify the entity responsible for enforcing SRO rules for broker-dealers.
FINRA and the SEC carry out examination and enforcement of MSRB rules for registered broker-dealers.
Enforcement is delegated to existing regulatory authorities (FINRA and SEC for broker-dealers; Federal Reserve, FDIC, and OCC for bank dealers).

Key Concept

MSRB Rulemaking vs. Enforcement Authority
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Topics

Municipal Securities Rulemaking Board (MSRB) Rules and Scope

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