MSRB Rule G-37 Political Contributions and 2-Year Negotiated Ban
Under MSRB Rule G-37, a Municipal Finance Professional (MFP) contributes $400 to the re-election campaign of a mayor in a city where the MFP resides and is eligible to vote. What is the regulatory consequence for the MFP's broker-dealer?
MSRB Rule G-37 permits MFPs to contribute up to $250 per election to candidates for whom they are eligible to vote (the de minimis exception). A $400 contribution exceeds the limit, triggering an automatic 2-YEAR BAN on negotiated underwriting business with that issuer.
Complete Analysis & Legal Rationale
The 2-year ban applies to negotiated underwriting (competitive bids are still permitted). The rule prevents 'pay-to-play' political corruption in municipal finance.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Accurately applies $250 de minimis cap and the 2-year negotiated underwriting ban.
Secondary market trading and competitive underwriting are not banned; only negotiated underwritings.
Rule G-37 penalizes the firm directly with the underwriting ban.
Being eligible to vote only protects contributions up to $250; $400 violates the rule.
Official Standard: Strict 2-year prohibition on negotiated underwriting following impermissible contributions.