How should a dealer treat conflicts of interest in municipal securities dealings?

• A. Disclose conflicts, manage or mitigate them, obtain client consent when required, and document the process.
• B. Do not disclose conflicts to prevent client bias.
• C. Ignore conflicts if the client does not file a complaint.
• D. Seek consent from the issuer rather than the client.

Answer: (B)

Dealers in municipal securities must address conflicts of interest by disclosing them to the client, taking steps to manage or mitigate the conflict, obtaining the client’s informed consent when required, and documenting the process. This transparency lets the client understand how a conflict could affect advice or decisions and provides a basis for the client to decide whether to proceed. Not disclosing conflicts undermines trust and violates standards; ignoring conflicts or seeking consent from the issuer instead of the client is inappropriate because the client’s interests, not the issuer’s, should drive the consent and disclosure.