Series 54 Example Questions
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By what day must a municipal advisor submit quarterly statements on political contributions to the MSRB?
A ) Within 17 days of the end of the firm’s fiscal quarter
B ) Within 17 days of the end of the calendar quarter
C ) On the last day of the quarter
D ) By the last day of the month following the end of each the calendar quarter
Answer: The Best Answer is D
Feedback: To monitor compliance with the rule, the MSRB requires dealers and advisors to submit quarterly statements reporting all of their political contributions for the previous quarter, whether made by MFPs, MAPs, non-MFP executives or non-MAP executives. They must also list all the issuers with whom they engaged in municipal securities business or advisory activities for the quarter. Reports must be filed on Form G-37 and sent to the MSRB by the last day of the month following the end of each calendar quarter.
A financial advisor to a municipal bond offering is allowed to serve as a placement agent to the offering:
A ) Under limited circumstances; however, the advisor may not be paid for its role as placement agent
B ) Under limited circumstances, and the advisor may be paid for its role as placement agent
C ) Under no circumstances
D ) In most cases, as long as the advisor is not paid for its role as placement agent
Answer: The Best Answer is A
Feedback: A financial advisor to a municipal bond offering is typically not allowed to serve as a placement agent on the offering. However, there is one exception to this rule that allows financial advisors to assist issuers to place an entire issue of a private placement with a government entity. Financial advisors may double as placement agents in this case; however, they are prohibited from receiving compensation when they do so.
Which of the following would most likely not be considered general information by the SEC?
A ) A description of a firm’s past municipal securities transactions, including detail about a revenue bond issuance for which it served as underwriter
B ) Information about the pros and cons of issuing variable rate debt, and an explanation of why variable rate debt would be a good fit for the municipality’s planned project
C ) A list of current market interest rates for 10-year revenue bonds, which the municipal entity requested
D ) A list of current market interest rates that give a sense of what the municipal entity could expect to pay for issuing debt
Answer: The Correct Answer is B
Feedback: General information must be based on facts, and it must not contain subjective opinions. In addition, the information cannot contain specific recommendations that are tailored to a municipal entity’s needs or objectives with respect to municipal securities. Examples of what the SEC considers general information include:
• Information regarding a person’s professional qualifications and prior experience
• Information requested by a municipal entity or obligated person regarding price quotes for investments that are available for purchase or sale in the market and meet criteria specified by the municipal entity
• General market and financial information
• Factual information describing various types of debt financing structures
An explanation of why variable rate debt would be a good fit for the municipality’s planned project would be considered a subjective opinion and a specific recommendation and thus not general.