A registered representative employed by a FINRA-member broker-dealer actively recommends and executes municipal bond transactions for retail clients. Which of the following statements correctly describes the regulatory authority responsible for establishing municipal securities rules and the entity responsible for enforcing them for this firm?
- The Municipal Securities Rulemaking Board (MSRB) creates the rules governing municipal securities, while FINRA enforces these rules for member broker-dealers.Answer
- BThe Municipal Securities Rulemaking Board (MSRB) creates municipal securities rules and directly examines and enforces compliance for all member firms.
- CFINRA establishes all rules regarding municipal securities offerings, while the Securities and Exchange Commission (SEC) acts as the sole enforcement authority.
- DThe Securities and Exchange Commission (SEC) establishes municipal industry rules, while commercial bank regulators enforce them for all securities broker-dealers.
Answer
The Municipal Securities Rulemaking Board (MSRB) creates the rules governing municipal securities, while FINRA enforces these rules for member broker-dealers.
The Municipal Securities Rulemaking Board (MSRB) is authorized by Congress to formulate rules governing municipal market transactions, but it explicitly lacks enforcement power. For FINRA-member broker-dealers and their associated persons, FINRA carries out examination and enforcement responsibilities to ensure compliance with MSRB rules.
Step-by-Step Solution
Key Concept
Division of rulemaking and enforcement authority between the MSRB and FINRA
Estimated Time:1m 0s