FINRA announced a sweep examination of member firms that act as, or work with, placement agents in soliciting and/or obtaining business with municipalities and public pension funds.  The test period is 1/1/09 to 9/30/10.  The following requested information and documents, as applicable, must be provided to FINRA on or before 11/1/10.

1.    List of municipalities and public pension funds for which financial services were provided where the firm employed the services of a 3rd party to solicit and/or obtain this business

Financial services includes:  asset management, proceeds investment or re-investment, trade execution, custodianship, asset valuation/appraisal, pension management or investment services, payroll management or administration, or money manager consulting services.  

2.    For those municipalities and public pension funds ID'd in Item 1, describe what financial services were provided, dates services were provided, and total amount of compensation earned for the services;

3.    List of clients for which the firm acted as a placement agent or provided 3rd-party marketing services;

Third party marketers may also be known as placement agents, solicitors, or third party intermediaries.  They likely are compensated or reimbursed for:  (i) expenses;  (ii) on-going retainers;  (iii) finder's fees based on business obtained or earnings from business received; and/or  (iv) some type of continuing "trailer fee".

4.    For those clients ID'd in Item 3, describe what financial services firm marketed for the 3rd party, which municipalities or public pension funds were solicited, dates services were solicited, and total amount of compensation earned for the services;

5.    Detailed description of compensation structure for the firm's services related to Items 1, 2, 3, 4, above.   Include descriptions of any compensation, such as directed order flow or other soft dollar arrangements;

6.    Copy of all of firm's WSP's during the relevant period relating to:  (i) its placement agent business; (ii) its supervision of political activities and contributions;  (iii) compliance with MSRB Rules G-37, G-38;  (iv) its supervision of Muni Finance Professionals (MFPs), as defined by MSRB; and  (v) outside business activities;

7.    Copies of all G-37 reports filed with the MSRB during relevant period;

8.    Copies of any political contribution disclosure/request forms filed by any employee of firm during relevant period.

For the actual text, click onto:   [ FINRA Targeted Exam, October ]