No. of Recommendations: 6
Paul writes: Secondly, you usually do not know what the market value of the bonds is because most are traded over the counter and prices of sales are not published. (Even bonds listed on the exchanges are rarely traded with small investors at published prices.)


T&S is avaiable for munis at EMMA. T&S for corps is available from FINRA. Also, any full-service broker will have a Bloomie and access to T&S. (How forthcoming they will be about what they really know about where prices are trading is another matter.)

But the situaion you describe --of a would-be seller having to act in the dark-- describes the way things used to be, not the current situation. Any bond position of "marketable" size should be able to be sold at the current best bid or better. If a broker won't/can't quote that price to a seller in real time, then the broker needs to be replaced for incompetence and/or for his/her assumable willingness to abuse the client and/or trade against them, which the SEC regs say is a NO-NO.

1. Duty of Fair Dealing
Broker-dealers owe their customers a duty of fair dealing. This fundamental duty derives from the Act's antifraud provisions mentioned above. Under the so-called "shingle" theory, by virtue of engaging in the brokerage profession (e.g., hanging out the broker-dealer's business sign, or "shingle"), a broker-dealer represents to its customers that it will deal fairly with them, consistent with the standards of the profession. Based on this important representation, the SEC, through interpretive statements and enforcement actions, and the courts, through case law, have set forth over time certain duties for broker-dealers. These include the duties to execute orders promptly, disclose certain material information (i.e., information the customer would consider important as an investor), charge prices reasonably related to the prevailing market, and fully disclose any conflict of interest.

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