Communications with the Public
How you communicate with customers is heavily regulated. FINRA Rule 2210 establishes the framework for all written (including electronic) communications between member firms and the public.
Three Categories of Communications
FINRA Rule 2210 defines three categories of communications, each with different approval and filing requirements:
1. Retail Communications
Definition: Any written or electronic communication distributed to more than 25 retail investors within a 30-day period.
Examples include:
- Television and radio advertisements
- Websites and social media posts
- Brochures and sales literature
- Mass emails to prospects
Requirements:
- Must be approved by a registered principal before first use
- Subject to specific content standards
- Certain types must be filed with FINRA
2. Correspondence
Definition: Written or electronic communication distributed to 25 or fewer retail investors within a 30-day period.
Examples include:
- Individual emails to customers
- Personalized letters
- Text messages to specific clients
Requirements:
- Subject to firm supervisory procedures
- Does not require pre-approval by a principal
- Must be reviewed according to firm's written procedures
3. Institutional Communications
Definition: Written communication distributed only to institutional investors.
Institutional investors include:
- Banks and insurance companies
- Registered investment companies
- Government entities
- Employee benefit plans with at least 100 participants
- Persons with at least $50 million in assets
Requirements:
- Must be reviewed according to firm procedures
- Less stringent than retail communications
- Principal pre-approval not required
Comparison Table
| Feature | Retail Communication | Correspondence | Institutional |
|---|---|---|---|
| Audience | >25 retail in 30 days | ≤25 retail in 30 days | Institutional only |
| Principal Pre-Approval | Required | Not required | Not required |
| FINRA Filing | Some required | No | No |
| Supervision | Highest | Moderate | Moderate |
Content Standards
All communications must meet these standards under FINRA Rule 2210(d):
Required Standards
- Fair and balanced — Present risks and benefits proportionally
- Based on principles of fair dealing and good faith
- Provide a sound basis for evaluating facts
- Not misleading — No exaggerated, promissory, or misleading statements
- Substantiated claims — Comparisons must be supported by facts
- Risk disclosure — Clearly disclose risks of products
Prohibited Content
- Predictions of future performance
- Promises of specific results
- Exaggerated or unwarranted claims
- Misleading comparisons
- Omitting material facts
Filing Requirements with FINRA
Certain retail communications must be filed with FINRA's Advertising Regulation Department:
Pre-Use Filing (10 business days before first use)
Required for retail communications concerning:
- Investment company securities with performance rankings
- Security futures
- Certain complex products
Post-Use Filing (within 10 business days of first use)
Required for:
- New member firms (first year — all retail communications)
- Retail communications concerning registered investment companies
Social Media Considerations
Social media posts are subject to Rule 2210. Key points:
- Static posts (like blog articles) = treated as retail communications
- Interactive posts (like real-time tweets) = may have more flexibility
- Third-party content — Firm responsible if it adopts or endorses it
- Recordkeeping — All posts must be retained per firm procedures
Exam Tip: Remember "25 is the line" — more than 25 retail investors in 30 days makes it a retail communication requiring principal pre-approval.
Under FINRA Rule 2210, which type of communication requires principal approval BEFORE first use?
A representative sends the same email to 30 individual retail customers over a two-week period. Under FINRA Rule 2210, this is classified as:
Which of the following is PROHIBITED in communications with the public?
1.4 Prospectus Requirements
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