Chapter 1 Practice Question Answers
1. Answer: C. The requirement for members to arbitrate disputes does not hold when a member firm has its license canceled, suspended, or revoked, or it goes bankrupt. In this case, customers may sue the firm in civil court.
2. Answer: B. For claims involving a customer, the majority of arbitrators must be public arbitrators. A panel will consist of one arbitrator for claims of $50,000 or less. Claims in excess of $50,000, but no more than $100,000, have one arbitrator unless the parties agree in writing to three. Claims in excess of $100,000 have three arbitrators unless the parties agree in writing to one. If the customer is the claimant, the customer may demand that a panel of three arbitrators be comprised entirely of public arbitrators, instead of just a simple majority.
3. Answer: A. The MSRB has the authority to make the rules that govern the behavior of municipal securities dealers and municipal advisors, but it does not have the authority to enforce t