Which of the following would NOT be considered a 'control' relationship requiring disclosure to customers?

• A. Treasurer of the township, whose bonds the firm is offering on an agency basis, is on the Board of Directors of the municipal firm
• B. The broker-dealer always makes a market in the issuer's securities that are being recommended
• C. Treasurer of the township, whose bonds the firm is offering on a principal basis, is on the Board of Directors of the municipal firm
• D. Municipal principal in a municipal securities firm is the supervisor of the school board whose bonds the firm is trading

Answer: (B)

The key idea is that disclosure to customers is required for control relationships—situations where someone connected to the broker-dealer has governance or management influence over the issuer.

If a township treasurer (whose bonds the firm is offering) sits on the board of the municipal firm, or a person in a municipal supervisory role (like supervising the school board) holds a position with the broker-dealer, these create a true control relationship. They raise potential bias or influence over issuer decisions, so disclosure is needed.

The broker-dealer that always makes a market in the issuer’s securities being recommended does not by itself create governance or control over the issuer. Market-making is a normal trading activity, not a governance relationship, so it would not be considered a control relationship requiring disclosure.