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Series 7 practice questionhardCommunications with the Public (Retail and Institutional) — FINRA Rule 2210: Retail Communication Approval

A broker-dealer is preparing a new marketing brochure for distribution to 120 retail clients and 17 institutional investors. The brochure contains performance projections and hypothetical illustrations of mutual fund returns. Which of the following statements about the approval and filing requirements is accurate?

  1. AThe brochure must be approved by a principal prior to use and filed with FINRA within 10 business days of first use.✓ Correct answer
  2. BThe brochure can be used without principal approval if distributed to fewer than 25 retail clients.
  3. CThe brochure does not require filing with FINRA since it is also sent to institutional investors.
  4. DThe brochure requires pre-use approval from FINRA and a principal due to the inclusion of hypothetical illustrations.
Explanation

Why A — The brochure must be approved by a principal prior to use and filed with FINRA within 10 business days of first use.

Retail communications distributed to more than 25 retail clients within a 30-day period, especially those with performance projections, must be approved by a principal prior to first use and filed with FINRA within 10 business days of first use.

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