When a firm communicates with the public about a municipal security involving performance claims, what is required?

• A. Any performance claims must be supported by appropriate evidence and not misleading.
• B. Performance claims may be stated without evidence if positive.
• C. Only rely on issuer-supplied data for performance claims.
• D. Disclosures not required for past performance.

Answer: (A)

Performance claims about municipal securities must be backed by appropriate evidence and presented in a way that is not misleading. When a firm puts forward performance data, it needs verifiable data, a clear calculation method, and sufficient context to avoid cherry-picking or skewed impressions. This includes showing the time period of the performance, what is included in the return (price changes, interest, fees), and the source of the data. If past performance is cited, it should come with a clear disclaimer that it is not indicative of future results. If hypothetical or back-tested data are used, they must be clearly labeled as such and include limitations. The goal is to ensure that any performance claim is fair, accurate, and materially complete so investors can make informed judgments.