What obligation do broker-dealers generally owe under MSRB rules?

• A. Suitability and fair dealing obligations
• B. Fiduciary duty to issuer
• C. No obligations to clients
• D. Full disclosure only

Answer: (A)

Under MSRB rules, broker-dealers owe customers a duty to deal fairly and to make recommendations that are suitable for the investor. Suitability means considering the customer’s financial situation, tax status, investment objectives, and risk tolerance before suggesting a municipal security. Fair dealing requires that communications be truthful and not misleading, with full and fair disclosure of material facts about the security and the transaction. There is no fiduciary duty to issuers under MSRB rules, and the obligations extend beyond mere disclosure. So, the obligation is a combination of suitability and fair dealing.