Any prudent investment begins with you - the investor - considering, among other things, why you are investing, when invested funds might reasonably be needed, and to what extent you can afford the risk of investment losses or of investment gains that are below expected levels. If you anticipate investing a certain amount of money, consider whether you are investing the right amount to achieve your ultimate purpose, and whether your remaining money will be sufficient to cover all your other needs. You also should consider the extent to which you can withstand different levels of investment risk, both as a financial and an emotional matter.

A prudent investment also requires an understanding of the investment you are making. You should ask yourself whether the investment is likely to produce the investment results you want. That in involves understanding the specific terms of the security and the likelihood that the issuer of the security will meet its obligations with respect to that security. You should also ask yourself whether the risks of the investment are within your comfort zone.
Learn about municipal bonds
Learn about 529 college savings plans

Virtually all investments involve investment risks. Risks can impact upon the ability of the issuer to make promised payments of principal and interest of securities held by investors, or they can impact upon the market value of a security when investors seek to buy and sell securities. Investors should understand the source from which the issuer will make payments and any conditions - legal or otherwise - that can limit the obligation to make payments or the availability of funds to make such payments. When a third party insures, guarantees or otherwise offers financial support for payments on securities, investors need to understand the financial condition of such third party and the limitations that may exist on that support. The official statement often contains a discussion of risk factors that the issuer has identified as of the date of issuance of the securities, although additional risks may emerge over the life of the securities.
Search for an official statement for your municipal security

Investors also should note that most 529 college savings plan investments are not guaranteed against investment loss, except in certain very limited cases. As with any investment in a mutual fund or other equity security, an investment in a 529 college savings plan can decrease in value. Although past performance of a security may be one of several appropriate factors to consider in choosing an investment, such past performance is not necessarily indicative of how the investment will perform in the future.

If you make an investment through a broker-dealer or bank, such institution must provide you with information material to your transaction at or prior to the time you agree to enter into that transaction. This disclosure often will be provided by supplying you with a copy of the issuer's official statement (sometimes referred to as a plan disclosure document in the case of 529 college savings plan). In connection with sales of new issue securities, the official statement must be delivered to you by no later than the settlement of your investment (generally, when you take ownership and have paid for the investment). The broker-dealer also must provide you with a confirmation of your transaction, which generally must be provided on a transaction-by-transaction basis (for many 529 college savings plans, transactions may instead be confirmed through periodic statements). The transaction confirmation includes basic information about your transaction. In particular, information on the confirmation - particularly the CUSIP number of the security - can be used to search for information about your security on EMMA.

Learn about your investments — You should read the official statement carefully and should never hesitate to ask your broker-dealer or bank to answer any questions you have or to clarify any information you do not fully understand. You should not feel constrained to wait for your broker-dealer or bank to deliver the required disclosure information to you. If you want more time to review the official statement, you should let your broker-dealer or bank know. Official statements are available through EMMA. In addition, many issuers may provide on their websites additional information that may be relevant in connection with making an investment in their securities.

In many cases, a broker-dealer or bank may recommend to you a particular investment or course of investments. In making a recommendation, the broker-dealer or bank must have reasonable grounds for believing that the recommendation is suitable. The broker-dealer or bank must make this "suitability determination" based on the information available about you and about the security you are purchasing. The same is true if the broker-dealer or bank has recommended that you sell a security you own. You should note that a broker-dealer or bank is obligated to make a suitability determination only if it has made a recommendation. Thus, if you have already made a determination on your own regarding a particular investment, the broker-dealer or bank generally will not be obligated to make a suitability determination.

Think about your reasons for investing — Consider when you will need the money you are investing, how much you are depending on receiving interest on the bond over time (or upon your investment growing in value, in the case of 529 college savings plans), and the extent to which your objectives may be affected if your investment loses money or if your earnings are lower than expected. Make sure you know enough about your investment to understand whether it is likely to deliver the investment results you are seeking. You should work with your broker-dealer or bank to ensure that your investment is suitable - and if you are making an investment decision on your own without the guidance of a broker-dealer or bank, you need to be doubly sure that you make your own "suitability determination".

Broker-dealers and banks that sell municipal securities generally receive compensation from your transaction. In many cases, you may not be charged a commission, but that usually does not mean that there is no cost for your transaction. Instead, in the case of most sales of municipal bonds, the broker-dealer or bank will obtain its compensation for a transaction through earning a profit, or "mark-up," through all or a portion of the differential between the price at which such firm purchased the security and the price at which such security was subsequently sold to the investor. (When a customer sells a municipal bond to a broker-dealer or bank, the firm's earnings usually result from a "mark-down," consisting of all or a portion of the differential between the price at which such firm purchased the security from the investor and the price at which such security was subsequently resold by the firm.) MSRB rules require that the price at which a broker-dealer or bank purchases or sells a municipal security to an investor be fair and reasonable, taking into consideration all relevant factors. Such factors include, among other things, consideration of the fair market value of the security (which can fluctuate up or down between the time the broker-dealer or bank purchases and resells the security) and expenses incurred in the transaction.

If you make an investment in a 529 college savings plan through a broker-dealer or bank, you may instead be charged a commission. The commission you pay must be disclosed to you. The confirmation or periodic statement that you receive from your broker-dealer or bank must disclose any transaction-based commissions charged by the firm. In addition, most plan disclosure documents for 529 college savings plans include information about commissions and other charges that may apply. Broker-dealers and banks are prohibited by MSRB rules from charging a commission that is in excess of a fair and reasonable amount, taking into consideration all relevant factors.

Know what you are paying to invest — Understand how much of the money you are paying to the broker-dealer or bank is going to work for you in your investment and how much is a cost of making the investment. Don't hesitate to ask your broker-dealer or bank if alternate compensation arrangements are offered for your particular investment and if volume discounts are available. Investors in 529 college savings plans should be aware that many plans offer multiple commission scales (such as front-end, back-end, asset-based or even no-load) and that, in some states, purchases may be made directly from the issuer at no or reduced commission in certain circumstances.

MSRB Investor Protection Rules — MSRB rules are designed, first and foremost, to protect investors and the public interest. They impose customer protection duties on broker-dealers and banks that sell municipal securities. MSRB rules obligate such firms to deal fairly with you, not to engage in any deceptive, dishonest or unfair practices, and to provide you with information vital to making your investment decision. These duties are further heightened if the broker-dealer or bank has recommended that you enter into an investment or course of investments. These rules are available at the MSRB's website.
Go to the MSRB's website

Want to find out about your broker? — The Financial Industry Regulatory Authority (FINRA) provides a free on-line utility to find out about the background, status and disciplinary history of individual brokers and firms.
Go to FINRA's BrokerCheck

Have a complaint? — If you have a complaint or are concerned that you have been treated unfairly by a broker-dealer or bank in connection with a transaction in municipal securities, there are a number of organizations you can contact:

Securities and Exchange Commission
100 F Street, N.E.
Washington, DC 20549
Attn: Office of Municipal Securities

Financial Industry Regulatory Authority (for securities firms)
1735 K Street, N.W.
Washington, DC 20006
Attn: Fixed Income Securities Regulation

Office of the Comptroller of the Currency (for national banks)
250 E Street, S.W.
Washington, DC 20219
Attn: Credit & Market Risks MS 6-2

Board of Governors of the Federal Reserve System (for state banks - Federal Reserve members)
20th and C Streets, N.W.
Washington, DC 20551
Attn: Market & Liquidity Risks, Division of Banking Supervision & Regulation

Federal Deposit Insurance Corporation (for all other state banks)
550 17th Street, N.W.
Washington, DC 20429
Attn: Planning & Program Development Section, Division of Supervision & Consumer Protection

Office of Thrift Supervision (for savings associations)
1700 G Street, N.W.
Washington, DC 20552
Attn: Trust and Specialty Programs

The MSRB is a rulemaking organization and does not have enforcement authority. Information received by the MSRB regarding a potential violation of MSRB rules is forwarded promptly to the appropriate enforcement agency listed above.

You may also contact your state's securities regulator. Links to state securities regulators are provided on the website of the North American Securities Administrators Association

Have a dispute with a firm or a broker? — If you have a dispute with a firm or its broker, attempting to resolve it directly with the sales representative or that representative's supervisor can often prove to be the most effective and efficient approach. If the dispute cannot be resolved, you may file an arbitration claim. Any customer with a claim, dispute or controversy against a broker-dealer involving its municipal securities activities may submit that claim to the arbitration forum of any self-regulatory organization of which the firm is member, such as FINRA. FINRA's arbitration program also can hear claims, disputes or controversies against banks involving their municipal securities activities.
Learn about FINRA's arbitration program