General Securities Representative (Series 7) Practice Exam – Your All-in-One Guide to Exam Success!

The role of a trustee in a bond issue is primarily to act on behalf of the bondholders, ensuring that the issuer complies with the terms of the bond agreement. This responsibility includes monitoring the issuer's performance and taking action if the issuer fails to meet its obligations as outlined in the bond indenture, such as making timely interest payments or repaying the principal at maturity. The trustee serves as a safeguard for the bondholders, representing their interests and providing oversight to uphold the integrity of the bond agreement.

The trustee's role does not involve managing the company's investments for shareholders, advising the board of directors, or overseeing daily operations within the company. Instead, the trustee functions as an intermediary, providing a layer of protection for the bondholders by enforcing the terms and conditions of the bond issue. This ensures that bondholders have recourse and a representative to advocate for their rights in cases of breaches or defaults by the issuer.