MSRB rules require that materials used to communicate with the public about municipal securities be reviewed and approved by a supervisor before they’re used. This preapproval helps ensure the content is accurate, not misleading, and includes any required disclosures. Advertising and sales literature are classic examples of items that must be approved beforehand because they are public communications that can impact investor decisions. The other items in the list aren’t public communications or are already governed by other review processes, so they don’t require preapproval prior to occurrence. So, the correct choice reflects that the items involving public-facing communications must be approved before they occur.

Disclosing material conflicts of interest to clients must be timely and clear, with a straightforward explanation of how the conflict is addressed. This lets the client understand any potential bias before or at the time of the muni security transaction, so they can make an informed decision. Waiting to disclose after the trade, or only after the client asks, or relying on a generic waiver, would deprive the client of crucial context and undermine fair dealing. A dealer should identify the conflict, explain its potential impact on the transaction, and describe the steps taken to mitigate or manage it, ensuring transparency and maintaining trust.

Bank dealers are overseen by banking regulators rather than the securities SRO when it comes to enforcing MSRB rules. If a bank is nationally chartered, the Office of the Comptroller of the Currency enforces MSRB rules for that bank; if a bank is a member of the Federal Reserve System, the Federal Reserve Board enforces them; and for insured state banks, the FDIC handles enforcement. FINRA, on the other hand, enforces MSRB rules for broker-dealers that are FINRA members, typically non-bank entities. For bank dealers, FINRA is not the primary MSRB enforcement body, which is why FINRA is not the enforcement authority in this context.

The main idea is that advertising for municipal securities should be truthful and not misleading. Testimonials can easily create a biased or unrepresentative impression, which increases the risk that investors will be misled about how the offering or the broker-dealer will perform. Because of that, the MSRB generally discourages the use of testimonials in muni advertising. If a testimonial is used at all, it must be handled with strict disclosures and safeguards to prevent misrepresentation: it should clearly state that the testimonial reflects an individual’s experience, may not be representative of others’ results, and the advertiser must not imply guarantees or endorsements. The overall goal is to ensure communications remain fair, accurate, and not misleading.