Chapter 3 Practice Question Answers
1. Answer: B. Each dealer is required to establish written procedures for the supervision and review of any incoming or outgoing correspondence between its Municipal Securities Representatives and the public pertaining to municipal securities activities. Dealers must maintain records indicating that the required supervision and review procedures have been met. In order to comply, the records must identify the persons who prepared the correspondence and the persons who reviewed the correspondence. The records must be preserved for no less than three years for bank dealers, including those municipal securities dealers that are a subsidiary or division of a bank. Other brokers, dealers, and municipal securities dealers must retain the records for at least four years. These records must be made available to regulatory agencies when requested.
2. Answer: C. An appropriate principal must promptly review and approve new customer accounts. For accounts that will transact in municipal securities, a General Securities Principal (Series 24), Municipal Securities Principal (Series 53), or Municipal Securities Sales Principal (Series 9/10) may serve this role.
3. Answer: D. Prior to recommending any transaction to a retail customer, a municipal securities dealer must try to obtain information concerning the customer’s financial status, tax status, investment objectives, and any other information pertinent to making suitable recommendations on the customer’s behalf. This suitability information is the information necessary to be able to recommend suitable transactions to a particular client.
4. Answer: B. Each dealer must maintain a current record of all written customer complaints. The record must be updated when the dealer receives new customer complaints. A dealer is not required to deliver a copy of an investor brochure upon receiving a customer complaint. Information related to transactions made on the be