A state housing authority issues revenue bonds underwritten by a syndicate led by the municipal securities division of a commercial bank. During the offering, questions arise regarding compliance with fair-dealing principles and regulatory oversight. Which of the following statements correctly identifies the statutory regulatory scope and enforcement authority over the entities involved in this transaction?
- The MSRB establishes rules governing the bank dealer's municipal underwriting conduct, but regulatory examination and enforcement are handled by federal banking regulators rather than the MSRB.Cevap
- BThe MSRB possesses direct statutory authority to conduct compliance examinations and levy disciplinary fines against the bank dealer, but has no regulatory authority over the state housing authority.
- CThe MSRB promulgates rules and directly enforces compliance for both the state housing authority as an issuer and the bank dealer as an underwriter.
- DFINRA holds sole jurisdiction to write rules, conduct compliance audits, and enforce sanctions for all municipal market participants, including bank dealers and municipal issuers.
Cevap
The statement specifying that the MSRB writes rules for the bank dealer while federal banking regulators handle examination and enforcement is correct.
The MSRB creates rules for municipal market intermediaries (including bank dealers) but relies entirely on external regulators for examination and enforcement. For a commercial bank's municipal division, enforcement authority rests with the appropriate federal bank regulator (e.g., Comptroller of the Currency, Federal Reserve Board, or FDIC) along with the SEC.
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MSRB Rulemaking Scope vs. Third-Party Enforcement Authority
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