Under MSRB rules, a control relationship must be disclosed to customers in which types of transactions?

• A. I and II only
• B. I, II, III, IV
• C. II and III only
• D. III and IV only

Answer: (B)

The key idea is that any time there is a control relationship between the broker-dealer (or its affiliate) and an issuer, customers must be informed about that relationship in connection with the municipal securities transaction. This is about potential conflicts of interest: if the firm has control or influence over the issuer, its recommendations, pricing, or handling of the transaction could be biased to benefit the firm rather than the customer. Because that conflict can arise in different kinds of transactions—whether it’s a primary issuance, a secondary market trade, a private placement, or another type covered by the rule—the disclosure must accompany all of these transaction types. In other words, disclosure is required in every listed category, so choosing to disclose in only some types would leave customers uninformed in other contexts. That’s why the all-encompassing option is correct: disclosure is required across all four types of transactions.