How does MSRB view the use of testimonials in muni advertising?

• A. Encourage testimonials to build credibility.
• B. Generally discouraged or restricted to avoid misleading representations; if used, must comply with rules and disclosures
• C. Prohibited for all municipal offerings
• D. Allowed only for institutional investors

Answer: (B)

The main idea is that advertising for municipal securities should be truthful and not misleading. Testimonials can easily create a biased or unrepresentative impression, which increases the risk that investors will be misled about how the offering or the broker-dealer will perform. Because of that, the MSRB generally discourages the use of testimonials in muni advertising. If a testimonial is used at all, it must be handled with strict disclosures and safeguards to prevent misrepresentation: it should clearly state that the testimonial reflects an individual’s experience, may not be representative of others’ results, and the advertiser must not imply guarantees or endorsements. The overall goal is to ensure communications remain fair, accurate, and not misleading.