Muni-Bond Buyers May Overpay

SEC commissioner warns buyers may not get best execution at a fair price because brokers don't have to disclose their markup.

Retail investors buying municipal bonds may overpay for their trades because brokers aren’t always required to disclose their commissions, a member of the U.S. Securities and Exchange Commission (SEC) said today.

Brokers who acquire bonds to fill an immediate customer order should be required to disclose how much they mark up the securities at sale, SEC Commissioner Daniel M. Gallagher said. Rules only require the broker to trade with customers at a “fair and reasonable” price, Gallagher said.

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