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

The pay-to-play rules regarding political contributions by firms involved in municipal securities are primarily enforced by the Municipal Securities Rulemaking Board (MSRB). This regulatory body establishes rules that govern the municipal securities market, including regulations that prohibit certain political contributions by brokers, dealers, and municipal securities dealers to municipal officials who are in a position to influence the awarding of public business.

The pay-to-play rules are designed to prevent corruption and ensure that the process of selecting firms for municipal bond underwriting and advisory services is transparent and fair. Specifically, MSRB Rule G-37 prohibits dealers from engaging in business with municipal entities if they have made certain political contributions to officials of those entities.

While other organizations like FINRA and the SEC play significant roles in the broader securities industry and have rules regarding political contributions, the specific pay-to-play rules in the context of municipal securities are under the purview of the MSRB. The Federal Reserve Board, meanwhile, primarily focuses on banking regulation and monetary policy rather than directly overseeing securities transactions or political contributions in this context.