Document ID: SEC-2015-1407-0001
Agency: sec
Document Type: Notice
Title: Orders: Designation of Financial Industry Regulatory Authority to Administer Professional Qualification Tests for Associated Persons of Registered Municipal Advisors
Posted Date: 2015-08-21T04:00Z

[Federal Register Volume 80, Number 162 (Friday, August 21, 2015)]
[Notices]
[Pages 50883-50885]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-20652]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75714]

Designation of the Financial Industry Regulatory Authority To 
Administer Professional Qualification Tests for Associated Persons of 
Registered Municipal Advisors

AGENCY: Securities and Exchange Commission.

ACTION: Order.

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SUMMARY: The Commission is designating the Financial Industry 
Regulatory Authority (``FINRA'') to administer professional 
qualification tests for associated persons of registered municipal 
advisors.

DATES: Effective Date: August 17, 2015.

[[Page 50884]]

FOR FURTHER INFORMATION CONTACT: Jessica Kane, Director; Rebecca Olsen, 
Deputy Director; Mary Simpkins, Senior Special Counsel; Edward Fierro, 
Attorney-Adviser; at (202) 551-5680, Office of Municipal Securities, 
U.S. Securities and Exchange Commission, 100 F Street NE., Washington, 
DC 20549-7010.

Discussion

    Section 975 of the Dodd-Frank Wall Street Reform and Consumer 
Protection Act (``Dodd-Frank Act'') \1\ amended Section 15B of the 
Securities Exchange Act of 1934 (``Exchange Act'') to, among other 
things, make it unlawful for a municipal advisor to provide certain 
advice to or on behalf of a municipal entity or obligated person with 
respect to municipal financial products or the issuance of municipal 
securities, or to undertake a solicitation of a municipal entity or 
obligated person, unless the municipal advisor is registered with the 
Commission.\2\ The registration requirement for municipal advisors 
established by the Dodd-Frank Act became effective on October 1, 
2010.\3\ On September 20, 2013, the Commission adopted the final rules 
for the permanent registration of municipal advisors (the ``Final 
Rules'').\4\ Municipal advisors were required to comply with the Final 
Rules as of July 1, 2014, and to register with the Commission under the 
Final Rules pursuant to a four-month phased-in compliance period, which 
began on July 1, 2014.\5\
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    \1\ See Dodd-Frank Wall Street Reform and Consumer Protection 
Act, Public Law 111-203, 124 Stat. 1376 (2010).
    \2\ See 15 U.S.C. 78o-4(a).
    \3\ See supra note 1.
    \4\ See Securities Exchange Act Release No. 70462 (September 20, 
2013), 78 FR 67468 (November 12, 2013).
    \5\ See Securities Exchange Act Release No. 71288 (January 13, 
2014), 79 FR 2777 (January 16, 2014).
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    Exchange Act Section 15B(b)(2) provides that the MSRB shall propose 
and adopt rules to effect the purposes of the Exchange Act with respect 
to, among other things, advice provided to or on behalf of municipal 
entities or obligated persons by brokers, dealers, municipal securities 
dealers, and municipal advisors with respect to municipal financial 
products, the issuance of municipal securities, and solicitations of 
municipal entities or obligated persons undertaken by brokers, dealers, 
municipal securities dealers, and municipal advisors.\6\
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    \6\ See 15 U.S.C. 78o-4(b)(2).
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    Specifically, Exchange Act Section 15B(b)(2)(A) requires, among 
other things, that the MSRB have rules that provide that no broker, 
dealer, municipal securities dealer, or municipal advisor shall provide 
advice to or on behalf of a municipal entity or obligated person with 
respect to municipal financial products or the issuance of municipal 
securities, unless, among other things, such municipal securities 
broker or municipal securities dealer and every natural person 
associated with such municipal securities broker or municipal 
securities dealer meets such standards of training, experience, 
competence, and such other qualifications as the MSRB finds necessary 
or appropriate in the public interest or for the protection of 
investors and municipal entities or obligated persons.\7\ Further, 
Section 15B(b)(2)(A) provides that, in connection with the definition 
and application of such standards, the MSRB may: (i) Appropriately 
classify municipal securities brokers, municipal securities dealers, 
and municipal advisors (taking into account certain relevant matters), 
and persons associated with municipal securities brokers, municipal 
securities dealers, and municipal advisors; (ii) specify that all or 
any portion of such standards shall be applicable to any such class; 
and (iii) require persons in any such class to pass tests administered 
in accordance with Exchange Act Section 15B(c)(7).\8\
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    \7\ See 15 U.S.C. 78o-4(b)(2)(A).
    \8\ See id. MSRB Rule G-2 sets forth standards of professional 
qualification and MSRB Rule G-3 sets forth professional 
qualification requirements for municipal advisors and their 
associated persons. See Securities Exchange Act Release No. 74384 
(February 26, 2015), 80 FR 11706 (March 4, 2015). MSRB Rule G-3 
includes two registration classifications for municipal advisors: 
municipal advisor representative and municipal advisor principal. 
See MSRB Rule G-3. Qualification as a municipal advisor 
representative is a prerequisite to qualification as a municipal 
advisor principal. See id. Under MSRB Rule G-3, a natural person 
associated with a municipal advisor who engages in municipal 
advisory activities on the municipal advisor's behalf (other than a 
person performing only clerical, administrative, support or similar 
functions) must take and pass the Municipal Advisor Representative 
Qualification Examination prior to being qualified as a municipal 
advisor representative. See MSRB Rule G-3(d). The MSRB developed a 
content outline and specifications for the selection of examination 
questions for the Municipal Advisor Representative Qualification 
Examination, which were filed with the Commission on April 22, 2015 
and became operative upon filing. See Securities Exchange Act 
Release No. 74858 (May 1, 2015), 80 FR 26310 (May 7, 2015). The MSRB 
will consider an examination for municipal advisor principals who 
are engaged in the management, direction or supervision of municipal 
advisory activities at a later date. See Securities Exchange Act 
Release No. 73708 (December 1, 2014), 79 FR 72225 (December 5, 
2014).
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    Exchange Act Section 15B(c)(7)(A) provides that the tests pursuant 
to Section 15B(b)(2)(A)(iii) shall be administered by, or on behalf of, 
the Commission or its designee, in the case of municipal advisors.\9\ 
The Commission designates FINRA to administer professional 
qualification tests for associated persons of registered municipal 
advisors who engage in municipal advisory activities or engage in the 
management, direction or supervision of municipal advisory activities, 
pursuant to the Commission's authority under Exchange Act Section 
15B(c)(7)(A)(iii).\10\
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    \9\ See 15 U.S.C. 78o-4(c)(7)(A)(iii).
    \10\ The Dodd-Frank Act also amended Exchange Act Section 15B to 
expressly provide that ``the Commission, or its designee, in the 
case of municipal advisors,'' conduct periodic examinations pursuant 
to Exchange Act Section 15B(b)(2)(E). See Exchange Act Section 
15B(c)(7)(A). In the Final Rules, the Commission designated FINRA as 
a designee to examine its members' activities as registered 
municipal advisors and evaluate compliance by such members with 
federal securities laws, Commission rules and regulations, and MSRB 
rules applicable to municipal advisors. See Securities Exchange Act 
Release No. 70462 (September 20, 2013), 78 FR 67468 (November 12, 
2013).
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    The Commission notes that FINRA has responsibility to enforce 
compliance by its members and persons associated with its members with 
the rules of the MSRB \11\ and currently administers all professional 
qualification tests developed, maintained, and owned by the MSRB, which 
are intended to ensure that municipal professionals demonstrate a basic 
competence in the subject matter related to the professional 
qualification classification in compliance with MSRB professional 
qualification requirement rules.\12\ FINRA currently has technical 
systems and procedures in place for scheduling examinations, collecting 
fees, administering examinations, and maintaining examination records 
and testing centers operated by vendors located throughout the 
country.\13\ In addition, FINRA has extensive experience in 
administering

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professional qualification tests for its broker-dealer members (which 
include municipal securities brokers and dealers) and other securities 
professionals.\14\ These qualification tests cover a broad range of 
subjects on the markets, the securities industry and its regulatory 
structure, including knowledge of FINRA rules and the rules of other 
self-regulatory organizations, such as the MSRB.\15\
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    \11\ See 15 U.S.C. 78o-3(b)(2).
    \12\ See Securities Exchange Act Release No. 74561 (March 23, 
2015), 80 FR 16485 (March 27, 2015). These professional 
qualification tests are Series 51 (Municipal Fund Securities Limited 
Principal Qualification Examination); Series 52 (Municipal 
Securities Representative Qualification Examination); and Series 53 
(Municipal Securities Principal Qualification Examination). The 
Commission is responsible for oversight of FINRA and the MSRB to 
ensure they comply with their respective rules and applicable 
federal securities laws. See Exchange Act Section 19. FINRA and the 
MSRB are also subject to various requirements under the Exchange 
Act, including the requirements in Section 19(b) and Rule 19b-4 
thereunder to file proposed rule changes with the Commission 
(including proposed rule changes related to fees and professional 
qualification standards and requirements). No proposed rule change 
will take effect unless approved by the Commission or otherwise 
permitted in accordance with the provisions of Exchange Act Section 
19(b). See Exchange Act Section 19(b).
    \13\ See https://www.finra.org/industry/qualification-exams.
    \14\ See id. These professional qualification tests are Series 3 
(National Commodities Futures Exam); Series 4 (Registered Options 
Principal); Series 6 (Investment Company and Variable Contracts 
Products Representative); Series 7 (General Securities 
Representative Examination); Series 9 and 10 (General Securities 
Sales Supervisor); Series 11 (Assistant Representative--Order 
Processing Exam); Series 14 (Compliance Official Exam); Series 16 
(Supervisory Analysts Exam); Series 17 (United Kingdom Securities 
Representative); Series 22 (Direct Participation Representative); 
Series 23 (General Securities Principal Exam--Sales Supervisor 
Module); Series 24 (General Securities Principal); Series 26 
(Investment Company and Variable Contracts Products Principal); 
Series 27 (Financial and Operations Principal Exam); Series 28 
(Introducing Broker-Dealer Financial and Operations Principal Exam); 
Series 30 (NFA Branch Managers Exam); Series 31 (Futures Managed 
Funds Exam); Series 32 (Limited Futures Exam--Regulations); Series 
34 (Retail Off-Exchange Forex Exam); Series 37 (Canada Securities 
Representative Exam); Series 38 (Canada Securities Representative 
Exam); Series 39 (Direct Participation Programs Principal Exam); 
Series 42 (Registered Options Representative); Series 55 (Equity 
Trader Exam); Series 56 (Proprietary Trader Examination); Series 62 
(Corporate Securities Representative Exam); Series 63 (Uniform 
Securities State Law Examination); Series 65 (NASAA Investment 
Advisors Law Examination); Series 66 (NASAA Uniform Combined State 
Law Examination); Series 72 (Government Securities Representative 
Exam); Series 79 (Investment Banking Representative Exam); Series 82 
(Private Securities Offerings Representative Exam); Series 86 and 87 
(Research Analyst Exam); Series 91 (FDIC Safety and Soundness 
Technical Evaluation); Series 92 (FDIC Compliance Technical 
Evaluation); Series 93 (FDIC Division of Resolutions and 
Receiverships Technical Evaluation); and Series 99 (Operations 
Professional Exam).
    \15\ Id.
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    IT IS THEREFORE ORDERED, pursuant to Exchange Act Section 
15B(c)(7)(A), that FINRA is designated to administer professional 
qualification tests for associated persons of registered municipal 
advisors who engage in municipal advisory activities or engage in the 
management, direction or supervision of municipal advisory activities.

    By the Commission.

    Dated: August 17, 2015.
Brent J. Fields,
Secretary.
[FR Doc. 2015-20652 Filed 8-20-15; 8:45 am]
 BILLING CODE 8011-01-P