Series 7 practice questionmediumMarketing and Prospecting — Use of Testimonials
A representative wants to include a testimonial from a satisfied client in a marketing brochure. Which statement accurately reflects the regulatory requirements?
- ATestimonials are allowed only for institutional investors.
- BTestimonials may only be used in internal communications.
- CTestimonials are prohibited in all broker-dealer advertisements.
- DTestimonials may be used if the fact that the client was compensated is disclosed.✓ Correct answer
Explanation
Why D — Testimonials may be used if the fact that the client was compensated is disclosed.
FINRA permits the use of testimonials in public communications if any compensation paid for the testimonial is clearly disclosed.
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