Study Question of the Week: January 22, 2014 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 52, and Series 65. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Study ? of the Week

Question (Relevant to the Series 6, Series 7, Series 52, and Series 65): 

The Fed (Federal) Funds rate refers to:

Answers:

A. The rate banks have to pay when borrowing from the Federal Reserve

B. The rate broker-dealers pay when borrowing on behalf of customers

C. The rate that the most credit worthy customers pay when borrowing

D. The rate banks charge each other for overnight loans over $1,000,000

Correct Answer: D. The rate banks charge each other for overnight loans over $1,000,000

Rationale: The Federal Funds Rate refers to the rate that banks charge each other for short-term loans.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Exam Alert: MSRB Prohibits Municipal Dealers from Consenting to Changes to Authorizing Documents

Effective February 3, 2014, the Municipal Securities Rulemaking Board (MSRB) will amend one of its rules to help protect municipal bond investors from unexpected changes in bond authorizing documents. The amendments prohibit broker-dealers from agreeing to changes to authorizing documents when acting as an underwriter or remarketing agent, or acting as an agent for bondholders. Continue reading

Effective February 3, 2014, the Municipal Securities Rulemaking Board (MSRB) will amend one of its rules to help protect municipal bond investors from unexpected changes in bond authorizing documents. The amendments prohibit broker-dealers from agreeing to changes to authorizing documents when acting as an underwriter or remarketing agent, or acting as an agent for bondholders.

The rule allows for exceptions in certain situations. These situations include:

    • the authorizing document explicitly permits an underwriter to provide bond owner consent, and this was disclosed in the offering documents;
    • the broker-dealer owns the securities outside of its capacity as an underwriter or remarketing agent;
    • the securities are held by the remarketing agent due to a mandatory tender of the securities;
    • the bond owners have provided written consent; or
    • the underwriter provides consent on behalf of prospective purchasers, if the changes will not become effective until all current bondholders have provided consent.

The “authorizing document” refers to the trust indenture, resolution, ordinance, or other document under which the securities are issued.

Source: MSRB Enhances Protections for Investors Against Unexpected Changes to Bond Authorizing Documents

This alert applies to the Series 7, Series 52, and Series 53.