FINRA Series 7Seeks Business for the Broker-DealerEasy
A registered representative wants to send a written promotional piece to 40 retail prospects who are not existing clients. Under FINRA Rule 2210, this communication must be classified as which of the following, triggering prior principal approval before use?
- ACorrespondence
- BRetail communication
- CPublic appearance
- DInstitutional communication
Show answer & explanationAnswer & explanation
Correct answer: B. Retail communication
A retail communication is any written communication distributed or made available to more than 25 retail investors within any 30 calendar-day period. Since 40 recipients exceeds the 25-person threshold, it is a retail communication and requires approval by a registered principal prior to use.
Why the other options are wrong
- A. Correspondence is limited to 25 or fewer retail investors within 30 days.
- C. Public appearances are unscripted interactive electronic forums, seminars, or speeches, not written pieces.
- D. Institutional communications go only to institutional investors, not retail prospects.
Retail Communication
Any written (including electronic) communication distributed or made available to more than 25 retail investors within any 30 calendar-day period.
- Requires prior approval by a registered principal before use.
- Retail investor = any person other than an institutional investor.
- Threshold is more than 25 retail investors in 30 days.
Memory trick: 25 or fewer = correspondence; more than 25 = retail, needs the principal's blessing first.