Communications with the Public

Definitions
The NASD (which in now known as FINRA) specifically defines the types of client communications as:

  • Advertisement -Any material published in a magazine, newspaper, radio, TV, telephone or tape recording, video display, billboard, motion picture, telephone directory, electronic or other public media

  • Sales literature -Any written or electronic communication made available to the public, which doesn't meet the definition of advertisement above. Sales literature refers to other forms of public communication such as seminars, market letters, solicitation letters, research reports or telemarketing scripts

  • Correspondence -Any written or electronic communication made for delivery to an individual client or prospect and not to multiple clients or the general public


Look Out!
You need to know the examples of each of these definitions! The difference between each kind of communication is critical to passing the test!


Rule 2210 also outlines approval, recording keeping, and content standards, which we will now discuss below.


Registered Principal Approval for Advertisements, Sales Literature and Independently Prepared Reprints
A registered principal of the member must approve by signature or initial and date each advertisement, item of sales literature and independently prepared reprint before the earlier of its use or filing with FINRA's Advertising Regulation Department.

Record-Keeping
Members must maintain all advertisements, sales literature and independently prepared reprints in a separate file for a period of three years from the date of last use. The file must include the name of the registered principal who approved each advertisement, item of sales literature and independently prepared reprint and the date that approval was given.

Members must maintain a file of information concerning the source of any statistical table, chart, graph or other illustration used by the member in communications with the public.

Date of First Use and Approval Information
The member must provide with each filing under this paragraph the actual or anticipated date of first use, the name and title of the registered principal who approved the advertisement or sales literature and the date that the approval was given.

Requirement to File Certain Material
Within 10 business days of first use or publication, an established member must file the following advertisements and sales literature with the Department:

  • Advertisements and sales literature concerning registered investment companies including mutual funds and variable contracts. The filing of any advertisement or sales literature that includes or incorporates a performance ranking or performance comparison of the investment company with other investment companies must include a copy of the ranking or comparison used in the advertisement or sales literature.

  • Advertisements and sales literature concerning public direct participation programs

  • Advertisements concerning government securities

Members who have not previously filed advertisements with the FINRA must file their initial advertisement at least ten days prior to use and must continue to do so for any other subsequent advertisements for a period of one year. Thereafter, they would be subject only to the requirement to file within 10 days of first use.

Filing of Television or Video Advertisements
If a member has filed a draft version or "story board" of a television or video advertisement pursuant to a filing requirement, then the member also must file the final filmed version within 10 business days of first use or broadcast.



Standards Applicable to Public Communications, Advertisements and Sales Literature

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