Chapter 4 Practice Question Answers
1. Answer: D. Dealers are required to submit quarterly statements to the MSRB using Form G-37 or G-37x. These statements must disclose all the dealer’s political contributions, whether made by MFPs or otherwise. Contributions made to an official of issuer where the MFPs or non-MFPs are entitled to vote do not need to be reported.
Form G-37 reports do not need to be filed with MSRB for any calendar quarter in which a dealer either (1) has no information that is required to be reported or (2) has not engaged in municipal securities business. The second exception only applies if the dealer has not engaged in municipal securities business for seven straight calendar quarters prior to the current quarter and has sent a completed Form G-37x to the MSRB. Form G-37x requires the dealer to certify that it has not engaged in municipal securities business for the last eight calendar quarters and acknowledge its obligations under Rule G-37.
2. Answer: B. Blind advertisements do not need to include disclosure statements and are not limited to explanatory information relating to municipal fund securities in general. They do not identify a dealer, but do provide issuer contact information for obtaining an official statement or other information and a short slogan of the issuer’s general objectives. However, a blind ad must not constitute a call to invest in municipal fund securities. If the issuer of the ad or the issuer’s agent is a dealer, no orders may be accepted by that dealer unless initiated by the customer.
3. Answer: B. Municipal securities business in this context is defined as the purchase of securities in a primary offering from an issuer (a negotiated underwriting, not a competitive underwriting), the offer or sale of securities in a private placement, or the provision of financial advisory services or remarketing agent services for a primary offering (where the services were not chosen on a competitive bid basis).