MSRB posts Series 54 test outline and guidance on advertising standards

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WASHINGTON — The anticipated Series 54 Test outline was released Thursday afternoon and municipal advisors can now start prepping.

The three and a half hour exam has 100 equally-weighted multiple choice questions divided into three categories — Understanding the Municipal Advisor Regulatory Framework, Supervising Municipal Advisory Activities and Supervising Municipal Advisor Firm Operations.

“Our forthcoming qualifying exam for municipal advisor principals will require individuals to demonstrate a minimum level of knowledge to effectively manage and supervise within their municipal advisory firm,” Municipal Securities Rulemaking Board President and CEO Lynnette Kelly said in a press release.

The MSRB will have a pilot Series 54 exam from February 2019 through June 2019 for all muni advisor principals. During that time, the board will establish a passing score for the test. MA principals who pass the test will be considered qualified as a principal when the MSRB permanently establishes the Series 54 in the fall of 2019. Qualification is important because the MSRB’s supervision rule requires that at least one person at a firm be designated a principal and be responsible for supervising the firm’s other professionals.

In the outline, the MSRB delves further into each category. The regulatory group also included a list of references and sample questions.

“Having the outline released is really important because MA’s who want to take the pilot exam will want to start their preparation routine ASAP,” said Susan Gaffney, executive director at the National Association of Municipal Advisors. “I know our members also want to make sure that there there are test prep companies, who will prepare Series 54 materials have time to develop their materials as well.”

The MSRB will host a webinar at 3 p.m. EST on Jan. 24 to provide more information on the Series 54 exam and how to participate in the pilot.

The test was developed by industry professionals consistent with the standards of the American Educational Research Association, American Psychological Association, the National Council on Measurement in Education and the Standards for Educational Psychological Testing, said Gail Marshall, the MSRB's chief compliance officer.

The MSRB sent out a job survey to registered municipal advisors to find aspects that were important to do their jobs, Marshall said. They received about 500 responses. The survey results then told the test developers what supervisors need to know in their job.

“Then that helps us identify the topics on the exams,” Marshall said.

The MSRB also released a compliance resource for its G-40 rule, which establishes content standards for muni advisor advertising and places formal restrictions on non-dealer MA advertising.

In September, the board sought public comment on a previous draft regarding G-40’s advertising content standards.

It received five letters, which homed in on adding more analysis for mock advertisements. The MSRB provided nine mock advertisements as an example.

In the compliance resource, NAMA asked for guidance regarding advertisements on social media and specifically hyperlinks. The MSRB said it will address those issues in its social media guidance.

“A key part of G-40 is related to social media,” Gaffney said. “Social media means a lot of different things to a lot of different people and it’s important for MAs to best understand how the rule applies to various platforms, whether that is a company’s LinkedIn page, a firm’s Twitter account as well as other social media venues.”

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