When a member places an order for an accumulation account in a new issue, what must the manager be disclosed at the time of order?

• A. The order will be sold to the general public
• B. The bonds are being purchased for an accumulation account
• C. The order will be designated as primary sale
• D. The order is for a customer

Answer: (B)

Disclosing that the bonds are being purchased for an accumulation account is the key concept. An accumulation account order means the member plans to build a position in the new issue for eventual distribution to clients, rather than a straight, immediate sale to the open market. The manager must be told this at the time of order so the underwriting desk can handle allocations and any potential conflicts properly and ensure the trade fits the agreed distribution plan. This specific disclosure informs the syndicate how the order will influence price, allocations, and the overall marketing approach.

Other statements don’t capture this particular requirement. For example, simply indicating that the order will be sold to the general public, or that it’s designated as a primary sale, or that the order is for a customer, may be true in some cases but do not address the mandatory disclosure about an accumulation account and how the security will be handled within the underwriting process.