Final answer:
A municipal registered representative must obtain written approval from the employee’s municipal firm before opening an account. Records of this approval and periodic disclosure of account transactions and holdings to the employer must be maintained.
Step-by-step explanation:
When a municipal registered representative (RR) opens an account for an employee of another municipal firm, it is important to adhere to certain regulatory requirements to ensure compliance with rules and to maintain standards of ethical conduct. In this context, the RR must get written approval from the employee's employer before opening the account. This ensures that the employee's financial activities are transparent and that there is no conflict of interest.
Additionally, the RR is required to maintain records of the written notification to the employer and the employer’s response. The RR should also disclose to the employer the transactions and holdings within the account periodically, as required by the employer's policies or applicable regulations. Understanding these requirements is critical for municipal RR to follow the guidelines laid out by the Financial Industry Regulatory Authority (FINRA) and Municipal Securities Rulemaking Board (MSRB).
It is also critical that RRs familiarize themselves with other regulations that may impact account opening procedures such as the MSRB Rule G-27, which outlines supervisory responsibilities. Conforming to these regulations helps in promoting fair practices and protecting the interests of all parties involved. In the context of municipal securities, it is crucial to operate with the highest degree of integrity, given the potential for conflicts of interest and the need for transparency in governmental and quasi-governmental operations.