How should conflicts of interest be addressed under MSRB rules?

• A. Ignore conflicts entirely
• B. Identify, disclose, and manage or mitigate conflicts, with appropriate controls and documentation
• C. Provide only internal notices
• D. Delay disclosure until after the transaction

Answer: (B)

Conflicts of interest must be handled through a structured process that protects the customer. Firms should first identify where a conflict exists, then disclose it to the client in a clear and timely manner, and finally implement controls to manage or mitigate the conflict. Documentation of these steps and the procedures used is essential so the firm can demonstrate it has taken appropriate oversight and maintained accountability.

This approach aligns with MSRB expectations that firms maintain written policies and procedures to address conflicts, provide meaningful disclosures to investors, and put in place practical controls to limit the impact of those conflicts. Ignoring conflicts, issuing only internal notices, or delaying disclosure until after a transaction would deprive investors of critical information and fails to meet those standards.