Apply Public Communication Standards - Series 7

What are the three main categories of communications with the public under FINRA Rule 2210?

Correspondence, retail communications, institutional communications
What is FINRA's standard for using rankings or awards in retail communications?

Must disclose ranking source, criteria, time period, and if paid for/advertised
What must be disclosed when a communication mentions potential benefits of an investment strategy?

Material risks and limitations must be presented in a balanced manner
What is required when performance is presented in a FINRA communication (general principle)?

Performance must not be misleading and must include material assumptions/limits
Identify the correct classification: A letter mailed to $20$ retail investors in a month.

Correspondence
What is the minimum record-retention period for communications with the public under FINRA rules?

At least $3$ years (first $2$ years in an easily accessible place)
What is the required supervisory standard for correspondence under FINRA Rule 2210?

Supervised and reviewed under firm procedures (not generally pre-approved)
What is the filing requirement timing for most retail communications that must be filed with FINRA?

Filed within $10$ business days of first use (unless a rule requires pre-filing)
What is the principal approval requirement for retail communications before first use?

Registered principal approval prior to first use (with limited exceptions)
What FINRA rule is the primary standard for broker-dealer communications with the public?

FINRA Rule 2210 (Communications with the Public)
Find the compliance issue: A retail flyer highlights yields but omits all mention of credit risk.

Unbalanced; must present material risks with benefits (fair and balanced)
What must a firm include in records for a retail communication under FINRA Rule 2210?

Final version, approval info, dates of use, and supporting data for claims
What is the typical FINRA filing timing for a new member firm's retail communications?

Filed at least $10$ business days prior to first use during the first year
What is FINRA's requirement when a communication references past performance?

Must not imply past performance will recur; include material context/limits
What is FINRA's rule on predicting or projecting investment performance in communications?

Generally prohibited to predict or project performance (limited exceptions apply)
What is the FINRA definition of retail communication under Rule 2210?

Any written/electronic message to more than $25$ retail investors in $30$ days
Which communications category generally requires principal pre-approval under FINRA Rule 2210?

Retail communications (subject to specified exceptions)
What is the required supervisory standard for institutional communications under FINRA Rule 2210?

Reviewed and approved by a principal as required by firm procedures
Which FINRA standard requires communications to provide a sound basis to evaluate facts about a product?

Fair and balanced presentation with material risks and benefits disclosed
Identify the correct classification: An email blast sent to $40$ retail clients in $30$ days.

Retail communication
What is the general content standard that applies to all FINRA communications with the public?

Must be fair and balanced; no false, exaggerated, or misleading claims
Identify the rule issue: An ad states, "This bond fund is risk-free and cannot lose value."

Misleading; prohibits false/exaggerated statements and must disclose risks
What is the FINRA definition of institutional communication under Rule 2210?

Communication made only to institutional investors (as defined by FINRA)
What is FINRA's rule on using "guarantee" language in communications?

Prohibited unless the guarantee is accurate and conditions are clearly disclosed
What is the FINRA definition of correspondence for communications classification purposes?

To $25$ or fewer retail investors within any $30$ -day period

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