Don?t risk becoming non-compliant: deadline for qualified muni advisor principal is approaching

BY SourceMedia | MUNICIPAL | 11/01/21 11:54 AM EDT By Bri Joiner

Municipal advisor firms have an important responsibility to ensure that their municipal advisor professionals are qualified in accordance with MSRB rules.

Municipal advisors should also be considering how they expect to fulfill their fiduciary duties to their municipal entity clients if the firm is not preparing to have its associated persons appropriately qualified beyond Nov. 30, 2021. MSRB Rule G-2 states that no municipal advisor shall engage in municipal advisory activities unless every natural person associated with such municipal advisor is qualified in accordance with the rules of the board.

The MSRB is reminding municipal advisor firms that the impending deadline of Nov. 30, in which to ensure that individuals who are functioning as municipal advisor principals are properly qualified by taking and passing the Municipal Advisor Principal Qualification Examination (Series 54 Exam), is quickly approaching.

On Dec. 1, 2021, any municipal advisor firm that has no individual qualified with the Series 54 exam will be out of compliance and referred to the examining authorities for violation of MSRB rules. Thus, the Series 54 Exam should be the highest priority for firms to meet the Nov. 30 compliance date.

The Series 54 exam was launched on November 12, 2019, and the grace period for taking and passing the exam was extended on multiple occasions in light of the pandemic. However, the MSRB is not granting any further extensions of time for firms to ensure that their principals pass the Series 54 Exam in addition to having already passed the Municipal Advisor Representative Qualification Examination (Series 50 Exam).

As a reminder, in accordance with MSRB Rule G-3, a municipal advisor principal is defined as any person associated with a municipal advisor who directly engages in the management, direction or supervision of the municipal advisory activities of the municipal advisor firm and its associated persons.

Additionally, MSRB Rule G-44(a)(ii), on appropriate principal, requires each municipal advisor firm to designate at least one individual as a municipal advisor principal who would be responsible for supervising the municipal advisory activities of the firm and that of its associated persons. The requirement to designate an individual as a municipal advisor principal also applies to the case of a sole proprietorship in which the single individual is acting in the capacity of a municipal advisor representative and municipal advisor principal on behalf of the municipal advisor firm.

How to Enroll
The Financial Industry Regulatory Authority (FINRA) administers the MSRB?s professional qualification exams. A municipal advisor firm must open an exam enrollment window for an associated person to take the exam in-person or online by completing and submitting an enrollment request through FINRA?s Test Enrollment Services System (TESS). Individuals who want to take the exam online must also complete FINRA?s Online Exam Administration Request Form and submit it to FINRA.

Once an exam enrollment window is opened an individual must schedule an exam appointment with a Prometric testing center. Additionally, if an individual is scheduling to test online there is flexibility to take the exam at any time (i.e., 24/7) depending on the appointment time being available.

The MSRB recommends you act now to open an exam enrollment window and schedule an appointment.

For assistance with enrolling for the Series 54 Exam, individuals can contact FINRA?s Candidate Services at 1-800-999-6647 or CandidateServices@finra.org. Hours of Operation are 8:00 a.m. to 6:00 p.m. ET.

Studying for the Series 54 Exam 
The MSRB has a dedicated Series 54 webpage of resources to assist individuals with preparing to take the exam, including the Series 54 Content Outline and Guide to Understanding the Municipal Advisor Principal Qualification Examination.

After the Deadline
After Nov. 30, those currently acting in the capacity of a municipal advisor principal, pursuant to the grace period, are no longer permitted to continue in that role without being properly qualified. Municipal advisor firms should be mindful as previously mentioned that MSRB Rule G-44, on supervisory and compliance obligations of municipal advisors, requires the designation of one or more municipal advisor principals to carry out the supervision required by the rule. Thus, a firm not having a properly qualified municipal advisor principal to discharge the supervisory responsibilities on behalf of the municipal advisor firm would be deemed in violation of MSRB Rule G-44. The MSRB refers potential rule violations to the appropriate examination and enforcement authorities.

On Dec. 1, the MSRB will publish the names of Series 54-qualified municipal advisor principals at each registered municipal advisor firm on MSRB.org.

The MSRB also will continue to educate municipal entities and obligated persons about municipal advisor professionals? qualification requirements and encourage them to verify the registration of firms and the qualification status of all municipal advisor professionals.

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