The MSRB Writes the Municipal Rulebook

2 questions on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

What does the SEC's oversight of FINRA's and the MSRB's own rulebooks actually consist of?

A. It reviews each SRO's own filed rulebook, which the SRO itself writes B. It writes each SRO's rulebook directly, on the SRO's behalf C. It enforces every SRO rule violation itself, in place of the SRO D. It sets each SRO's own membership dues

How sure are you?

Sure Fairly sure Guessing

Correct: A. Every SRO's rulebook, including FINRA's and the MSRB's, is filed with and can be reviewed by the SEC; the SRO itself writes the rules.

B. The SRO writes its own rulebook; the SEC reviews it rather than writing it.

C. FINRA and CBOE enforce their own rules, and an MSRB violation is enforced by FINRA or a bank regulator, not routinely by the SEC itself.

D. Membership dues are not part of the SEC's stated oversight role over an SRO's rulebook.

Unit: SIE outline 1.1.1

Question 2Above the exam

A newly public company's registration statement becomes effective on day 20. A representative later tells a client the SEC's own review means the offering was approved and is safe. Separately, the client asks who wrote the rule requiring the representative's own firm to supervise that communication. Which pair is correct?

A. The rep's statement is accurate; FINRA wrote the supervision rule B. The rep's statement is unlawful under Section 23; FINRA wrote the supervision rule, and also enforces it C. The rep's statement is accurate; the SEC wrote the supervision rule directly D. The rep's statement is unlawful under Section 23; the MSRB wrote the supervision rule

How sure are you?

Sure Fairly sure Guessing

Correct: B. Section 23 makes an 'approved and safe' statement about an effective registration statement unlawful, not merely inaccurate; and FINRA both writes and enforces its own rulebook for broker-dealers and their representatives, unlike the MSRB, which only writes.

A. Wrong on both counts: effectiveness is not approval, and FINRA, not this rep's own firm in isolation, wrote the supervision rule the SEC reviews.

C. The SEC reviews the rulebook FINRA itself writes; it does not write FINRA's supervision rule directly.

D. Correctly calls the rep's statement unlawful, but this supervision rule concerns broker-dealer representatives generally, FINRA's own domain, not the MSRB's municipal scope.

Unit: SIE outline 1.1.1

The MSRB Writes the Municipal Rulebook

The trick

Now answer