How should a dealer disclose affiliations with investment products in muni communications?

• A. Clearly disclose affiliations and any potential conflicts affecting the recommendation or disclosure.
• B. Hide affiliations if the product performed well.
• C. Only disclose affiliations if asked by the client.
• D. Affiliations are not required to be disclosed in communications.

Answer: (B)

This item tests how a dealer should handle conflicts of interest in muni securities communications. When a dealer has an affiliation with an investment product or there are other conflicts that could influence a recommendation, those affiliations and conflicts must be disclosed clearly in the communication. This transparency helps investors evaluate potential biases and make informed decisions. Concealing affiliations, even if the product performed well, or disclosing only upon client request, undermines fair dealing and can mislead. Therefore, the proper approach is to clearly disclose affiliations and any potential conflicts that could affect the recommendation or the disclosure itself.