Communications with Prospects and Customers - FINRA Conduct Rule 2211
Institutional Sales Material and Correspondence
Correspondence consists of any written letter or electronic mail message distributed by a member to:
- one or more of its existing retail customers; and
- fewer than 25 prospective retail customers within any 30-calendar-day period.
Institutional Sales Material consists of any communication that is distributed or made available only to institutional investors.
Institutional Investor means any:
- person described in Rule 3110 (c)(4), regardless of whether that person has an account with an FINRA member;
- governmental entity or subdivision thereof;
- employee benefit plan that meets the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and has at least 100 participants, but does not include any participant of such a plan;
- qualified plan, as defined in Section 3(a)(12)(C) of the act, that has at least 100 participants, but does not include any participant of such a plan;
- FINRA member or registered associated person of such a member; and
- person acting solely on behalf of any such institutional investor.
- No member may treat a communication as having been distributed to an institutional investor if the member has reason to believe that the communication or any excerpt thereof will be forwarded or made available to any person other than an institutional investor.
Existing Retail Customer means any person for whom the member or a clearing broker or dealer on behalf of the member carries an account, or who has an account with any registered investment company for which the member serves as principal underwriter, and who is not an institutional investor. "Prospective Retail Customer" means any person who has not opened such an account and is not an institutional investor.
Approval and Recordkeeping
Registered Principal Approval
Correspondence need not be approved by a registered principal prior to use, but is subject to supervision and review requirements.
Each member shall establish written procedures that are appropriate to its business, size, structure and customers for review by a registered principal of institutional sales material used by the member and its registered representatives. Such procedures should be in writing and be designed to reasonably supervise each registered representative. Where such procedures do not require review of all institutional sales material prior to use or distribution, they must include provision for the education and training of associated persons as to the firm's procedures governing institutional sales material, documentation of such education and training, and surveillance and follow-up to ensure that such procedures are implemented and adhered to. Evidence that these supervisory procedures have been implemented and carried out must be maintained and made available to the FINRA upon request.
Members must maintain all institutional sales material in a file for a period of three years from the date of last use. The file must include the name of the person who prepared each item of institutional sales material.
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.
Each member's correspondence and institutional sales literature may be subject to a spot-check procedure under Rule 2210. Upon written request from the Advertising Regulation Department, each member must submit the material requested in a spot-check procedure within the time frame specified by the Department.
Content Standards Applicable to Institutional Sales Material and Correspondence
All institutional sales material and correspondence are subject to the content standards of Rule 2210.
All correspondence (which for purposes of this provision includes business cards and letterhead) must:
- prominently disclose the name of the member and may also include a fictional name by which the member is commonly recognized or which is required by any state or jurisdiction;
- reflect any relationship between the member and any non-member or individual who is also named;
- if it includes other names, reflect which products or services are being offered by the member.
Members may not use investment company rankings in any correspondence other than rankings based on (A) a category or subcategory created and published by a ranking entity as defined in IM-2210-3(a) or (B) a category or subcategory created by an investment company or an investment company affiliate but based on the performance measurements of a ranking entity.FINRA Conduct Rule 2212
Mutual Funds & ETFsFind out information about the ProShares Ultra Nasdaq Biotechnology exchange-traded fund, and learn detailed analysis of its characteristics and suitability.
InsuranceRead about the top private auto insurers licensed to operate in New York, and learn about recent trends in market share among these companies.
Mutual Funds & ETFsLearn more about the Direxion Daily S&P Biotech Bull 3x exchange-traded fund, a new triple-leveraged ETF tracking biotechnology equities.
Mutual Funds & ETFsLearn more about the First Trust Health Care AlphaDEX exchange-traded fund, an indexed fund that uses an advanced stock selection methodology.
InvestingCharles de Ganahl Koch is the CEO and co-owner of Koch Industries, an oil and industrial conglomerate that ranks as one of the largest privately held companies in America. While he and his company ...
Investing NewsOnce again, markets continue to exhibit above normal volatility with U.S. index futures pointing to an open down around 1%.
Investing BasicsConvertible preferred stock is preferred stock that can be converted into common stock as of a predetermined date at a specified ratio.
EconomicsThe consumption function shows the level of consumer spending as it relates to disposable income.
InsuranceParse the pros and cons of different policy types to ensure the best coverage for your needs.
InsuranceA co-pay is a set dollar amount an insured patient pays when visiting a doctor, filling a prescription, having tests performed or receiving other medical treatment.
An economic hypothesis theorizing that pay of employees tends ...
The interest rate paid by financial institutions for the funds ...
An indicator of a company's profitability, calculated as revenue ...
The estimated volatility of a security's price.
The most basic or standard version of a financial instrument, ...
Expenses associated with the maintenance and administration of ...
Despite the fact that earning dividends requires no active participation on the part of the shareholder, they do not meet ... Read Full Answer >>
Dividend income is taxable but it is taxed in different ways depending on whether the dividends are qualified or nonqualified. ... Read Full Answer >>
Distribution of dividends reduces the net asset value (NAV) of mutual fund shares. However, this doesn't mean that fund investors ... Read Full Answer >>
Unlike a 401(k) or Individual Retirement Account (IRA), mutual funds are not classified as retirement accounts. Employers ... Read Full Answer >>
Dividends paid in cash affect a company's balance sheet by decreasing the company's cash account on the asset side and decreasing ... Read Full Answer >>
Mutual funds invest in stocks, but certain types also invest in government and corporate bonds. Stocks are subject to the ... Read Full Answer >>