A financial regulatory orientation for new securities industry professionals highlights the roles of various regulatory bodies and self-regulatory organizations (SROs). Which TWO of the following statements correctly describe the scope and authority of SROs such as FINRA and the MSRB?
- FINRA is a membership-based self-regulatory organization that oversees broker-dealers and registered representatives under the supervision of the SEC.Answer
- The Municipal Securities Rulemaking Board (MSRB) formulates rules governing municipal securities activities but relies on FINRA and bank regulators for examination and enforcement.Answer
- CFINRA is a statutory federal government agency empowered to bring criminal charges and impose state prison sentences on securities law violators.
- DThe MSRB directly enforces its own rules by conducting direct examinations and issuing administrative fines to municipal bond issuers.
Answer
The correct statements are that FINRA is a membership-based self-regulatory organization overseeing member broker-dealers under SEC supervision, and that the MSRB creates rules for municipal securities but relies on FINRA and bank regulators for enforcement.
FINRA is a self-regulatory organization (SRO) operating under SEC oversight to regulate broker-dealers and registered representatives. The MSRB proposes and adopts rules for municipal securities firms and advisors, but lacks statutory authority to examine firms or enforce compliance directly, relying on FINRA and banking regulators to perform those functions.
Step-by-Step Solution
Key Concept
Roles and Enforcement Authority of SROs (FINRA and MSRB)
Estimated Time:50s