FINRA Series 7Seeks Business for the Broker-DealerMedium
A representative emails a personalized market commentary to 20 existing retail clients within a 30-day period. Which statement about this communication is correct?
- AIt is a public appearance exempt from any supervisory review
- BIt is retail communication and must be approved by a principal before it is sent
- CIt must be filed with FINRA's Advertising Regulation Department before use
- DIt is correspondence and does not require prior principal approval, but must be reviewed under the firm's supervisory procedures
Show answer & explanationAnswer & explanation
Correct answer: D. It is correspondence and does not require prior principal approval, but must be reviewed under the firm's supervisory procedures
Because the email went to 20 retail investors (25 or fewer) within 30 days, it is classified as correspondence under Rule 2210. Correspondence does not require prior principal approval but must be supervised in a manner consistent with Rule 3110, such as risk-based post-use review.
Why the other options are wrong
- A. Public appearance refers to live/interactive forums, not written email correspondence.
- B. 20 recipients falls below the 25 threshold, so it is not retail communication.
- C. Only certain retail communications, not correspondence, are subject to FINRA filing.
Correspondence (Rule 2210)
Written or electronic communications distributed to 25 or fewer retail investors within any 30 calendar-day period.
- No prior principal approval required.
- Must still be supervised per Rule 3110 supervisory procedures.
- Firms often use risk-based review rather than 100% pre-review.
Memory trick: 25 or under, correspondence wonder — no pre-approval needed, but watch it later.