What are the core prohibitions against fraud in MSRB rules?

• A. Misrepresentation, manipulation, and other deceptive practices in the sale or trading of municipal securities.
• B. Providing fair and transparent quotes free of any misrepresentation.
• C. Allowing clients to trade on inside information if disclosure is made afterward.
• D. Engaging in price improvement programs even if misleading.

Answer: (A)

MSRB antifraud provisions prohibit misrepresentation, manipulation, and other deceptive practices in the sale or trading of municipal securities. This means you cannot make false or misleading statements about a security’s features, credit quality, or risks, and you cannot engage in actions intended to create a false impression of price or liquidity. Providing fair and transparent quotes is a standard of fair dealing, but it describes expected behavior, not the specific antifraud prohibition itself. Trading on inside information, even with later disclosure, is not permitted under these rules because the core goal is to prevent unfair advantage and deception. Price improvement programs must be genuine and not used to mislead; otherwise they would run afoul of the same protections. Therefore, the best description of the prohibitions is misrepresentation, manipulation, and other deceptive practices in municipal securities transactions.