FINRA Series 7Seeks Business for the Broker-DealerMedium
A registered representative develops a new investment seminar presentation. This presentation includes hypothetical illustrations of investment performance and is intended for use with an audience of 30 retail investors. Which of the following best describes the FINRA filing and approval requirements for this presentation?
- AIt must be approved by a principal prior to first use, but no FINRA filing is required.
- BIt must be approved by a principal prior to first use and filed with FINRA within 10 business days of first use.
- CIt does not require principal approval or FINRA filing because it is for an educational seminar.
- DIt must be filed with FINRA at least 10 business days prior to first use and is subject to principal approval.
Show answer & explanationAnswer & explanation
Correct answer: D. It must be filed with FINRA at least 10 business days prior to first use and is subject to principal approval.
Retail communications that include hypothetical illustrations of investment performance must be filed with FINRA at least 10 business days prior to first use. All retail communications also require principal approval prior to use.
Why the other options are wrong
- A. A FINRA filing is required for retail communications with hypothetical illustrations of investment performance.
- B. Filing is generally 10 days BEFORE first use for hypothetical performance communications, not within 10 days after.
- C. Retail communications always require principal approval, and those with hypothetical performance illustrations require FINRA filing.
Retail Communication Filing (Hypothetical Performance)
Any written or electronic communication distributed to more than 25 retail investors within any 30-calendar-day period that includes hypothetical illustrations of investment performance requires specific FINRA filing and principal approval.
- Applies to communications with 25+ retail investors.
- Must be filed with FINRA at least 10 business days BEFORE first use.
- Requires principal approval BEFORE first use.
Memory trick: Retailers Ponder Hypotheticals 10 Days Early.