FINRA Series 6 Investment Company and Variable Contracts Products Representative ExaminationProfessional Conduct and Ethical ConsiderationsMedium
A registered representative (RR) is developing a new social media campaign to attract potential clients. The campaign includes testimonials from current satisfied clients, praising the RR's investment advice and the high returns they have achieved. What must the RR ensure regarding these testimonials?
- AThe testimonials are pre-approved by a principal of the firm.
- BThe testimonials are from clients who have been with the RR for at least five years.
- CThe testimonials are only posted on the RR's personal social media accounts, not the firm's.
- DThe testimonials include a disclaimer that past performance is not indicative of future results.
Show answer & explanationAnswer & explanation
Correct answer: A. The testimonials are pre-approved by a principal of the firm.
FINRA Rule 2210 (Communications with the Public) requires that all retail communications, including social media posts containing testimonials, be approved by a qualified principal of the firm before first use. Testimonials must also comply with specific content standards.
Why the other options are wrong
- B. There is no specific FINRA rule requiring testimonials to be from clients of a certain tenure.
- C. The platform (personal vs. firm account) does not exempt the communication from pre-approval requirements if it's considered business-related retail communication.
- D. While a disclaimer about past performance is good practice, it does not replace the requirement for principal approval of the testimonial itself.
Social Media Testimonial Rules
Rules governing the use of client testimonials in social media and other communications, requiring pre-approval and adherence to specific content standards.
- All retail communications, including testimonials, require principal pre-approval.
- Testimonials must not be misleading.
- If material conflicts of interest exist for the person giving the testimonial, they must be disclosed.
- Firms must supervise and retain records of social media communications.
Memory trick: Testimonials on social media? Principal must approve, always, no deviation.