Municipal Securities Suitability

What this video covers

• The three suitability obligations the MSRB shares with FINRA: reasonable-basis, customer-specific, and quantitative
• Why a municipal bond recommendation is governed by the MSRB suitability rule even though the standard is substantively identical to FINRA's
• The customer information a registered representative must make reasonable efforts to gather before recommending a muni: financial status, tax status, and investment objectives
• Why federal and state tax bracket is the most critical data point when recommending municipal bonds
• Why recommending tax-free municipal bonds to a tax-exempt entity like a pension fund or 401(k) plan is a customer-specific suitability violation
• The yield trade-off that makes municipal bonds a poor fit for any investor who does not benefit from the federal tax exemption
• How MSRB enforcement actually flows: through FINRA for broker-dealers and through bank regulators for banks, never directly from the MSRB itself