MSRB rules allow all of the following when selling a new issue of municipal bonds EXCEPT:

• A. not disclosing the spread on reofferings of competitively bid issues
• B. providing a customer with a Preliminary Official Statement if the Final Official Statement is not yet available at settlement
• C. disclosing order priority provisions upon the request of customers
• D. orally agreeing to repurchase the bonds at an agreed price

Answer: (C)

The key idea is what information about a primary sale a member can share with investors. In a new-issue offering, you may provide a Preliminary Official Statement if the Final Official Statement isn’t ready at settlement, and you can discuss standard terms and practices that investors rely on, such as the general pricing approach or, when appropriate, a repurchase arrangement that is properly documented. Disclosing the spread on reofferings isn’t always required for competitive bids, since there isn’t an underwriter spread in that context, and providing an oral repurchase agreement can be permissible within proper disclosure and writing requirements.

What isn’t appropriate is sharing order priority provisions—the specifics of how orders are allocated among accounts within the underwriting syndicate. Those provisions are internal, nonpublic allocation mechanics, not material information about the security or issuer that an investor needs to know to make an informed decision. Revealing them could reveal allocation strategies or create perceptions of favoritism, which conflicts with fair dealing standards. Therefore, disclosing order priority provisions upon request is not allowed, making that option the exception.