A representative sends the same personalized letter promoting a proprietary mutual fund to 30 different prospective retail clients over a two-week period, then sends 10 more copies to additional prospects the following week, bringing the 30-day total to 40 recipients. How should this series of letters be classified and treated under FINRA Rule 2210?
- AAs retail communication, because the cumulative total exceeds 25 retail investors within a 30-day period, requiring prior principal approval
- BAs institutional communication, because letters were personalized for each recipient
- CAs correspondence, since each batch was sent separately and individually falls at or below 25 recipients
- DAs a public appearance exemption, since the content was distributed in written rather than verbal form
Show answer & explanationAnswer & explanation
Correct answer: A. As retail communication, because the cumulative total exceeds 25 retail investors within a 30-day period, requiring prior principal approval
FINRA aggregates communications sent to retail investors within any rolling 30 calendar-day period to determine whether the 25-person threshold is exceeded. Because the total reaches 40 recipients within 30 days, the entire series is treated as retail communication requiring prior principal approval, even though individual batches appeared smaller.
Why the other options are wrong
- B. Personalization does not make a communication institutional; audience type (institutional investor) determines that classification.
- C. Splitting mailings into smaller batches does not avoid aggregation; the 30-day cumulative total governs classification.
- D. Public appearance applies to live/interactive forums, not mailed written letters.
Aggregation Rule for Retail Communication Threshold
FINRA aggregates communications sent to retail investors over any rolling 30 calendar-day period; if the cumulative total exceeds 25, the material is classified as retail communication requiring prior principal approval.
- Splitting mailings into smaller batches does not avoid the aggregation rule.
- The 30-day period is a rolling window, not a fixed calendar month.
- Once classified as retail communication, prior principal approval is mandatory.
Memory trick: Don't slice the mail to dodge the scale — 30 days, all counted, no escape.