Financial Industry Regulatory Authority (FINRA) Practice Exam 2026 - Free FINRA Practice Questions and Study Guide

In the context of municipal securities, the rules governing political contributions set specific waiting periods before dealers can participate in competitive bidding, particularly when a contribution has been made to an official of the issuer.

When a dealer makes a political contribution, the waiting period is typically increased if the bid is for securities subject to a negotiated sale. This means that if a municipal securities dealer makes a contribution to an official of a municipality, they must wait a designated period before making competitive bids on that issuer's bonds if those bonds are offered through negotiation. In a negotiated bid, the issuer directly engages a specific dealer or group of dealers rather than opening the bidding process to all potential bidders, which can lead to a potential conflict of interest.

The intent of the waiting period is to prevent any potential undue influence from political contributions on the bidding process and to protect the integrity of competitive pricing. Thus, the specific scenario in which the contribution is directly related to a negotiated bid indeed alters the required waiting period, reflecting the heightened sensitivity around potential conflicts of interest.

Other scenarios, such as contributions below a minimum threshold or those made over a year prior, do not generally result in the same impact on the waiting period. Similar, bids for non-negotiated bonds do not alter