First National Bank is a municipal securities dealer. Its municipal securities department is supervised by Mary Watkins, a municipal securities principal. The department has five other employees, including two municipal securities representatives. Martin Wells, a commercial loan customer of the bank, tells Ms. Watkins he wants to invest in municipal securities and asks for her help. Mr. Wells has never dealt with the municipal securities department of the bank and has never purchased municipal securities. He wants to purchase the securities today. What should Ms. Watkins do?

Question

Quizplus · Accepted Answer

As a municipal securities dealer, First National Bank and its employees are subject to the Municipal Securities Rulemaking Board (MSRB) rules, including the suitability requirements. Therefore, Ms. Watkins cannot help Mr. Wells make the purchase unless she can assure that the transaction meets the suitability requirements. It is her responsibility to obtain all relevant information about the customer's financial situation, investment objectives, and other factors, and to make a determination that any recommendations or transactions are suitable for the customer based on that information. Referring Mr. Wells to a municipal securities representative may be appropriate if the representative has the necessary information to determine suitability and make appropriate recommendations.

First National Bank Is a Municipal Securities Dealer