A registered representative at a member securities firm plans to distribute educational brochures about local infrastructure bonds to prospective retail clients. Which entity writes the rule governing municipal securities promotional materials, and which organization is responsible for enforcing compliance for this securities firm?
- The MSRB establishes the rule, while FINRA enforces it.Answer
- BThe MSRB establishes the rule and directly enforces it through its own enforcement division.
- CFINRA establishes the rule, while the MSRB oversees compliance investigations.
- DThe municipal bond issuer establishes the rule, while the SEC enforces it.
Answer
The Municipal Securities Rulemaking Board (MSRB) creates rules governing municipal market transactions and broker-dealer communications, but relies on FINRA and the SEC (or banking regulators for bank dealers) to enforce them.
The Municipal Securities Rulemaking Board (MSRB) creates rules governing municipal securities activities, including advertising standards and fair dealing. However, the MSRB is strictly a rulemaking body with no authority to inspect firms or enforce its rules. Enforcement for securities firms (non-bank broker-dealers) is delegated to FINRA and the SEC.
Step-by-Step Solution
Key Concept
MSRB Rulemaking Scope vs. Enforcement Authority