NASAA Series 63Communication with Customers and ProspectsMedium
An investment adviser representative (IAR) publishes an article in a local financial newspaper discussing several investment strategies and mentioning the IAR's firm name and contact information. Under the Uniform Securities Act, this article is generally considered:
- AAn advertisement, subject to specific filing and content rules.
- BEducational material, not subject to regulatory scrutiny.
- CCorrespondence, requiring limited supervision.
- DPublic relations material, exempt from specific advertising rules.
Show answer & explanationAnswer & explanation
Correct answer: A. An advertisement, subject to specific filing and content rules.
Any communication that reaches a broad audience and promotes the IAR's services or firm is generally considered an advertisement under the Uniform Securities Act. This includes articles in newspapers, even if they discuss general strategies, if they include identifying information for the IAR or firm.
Why the other options are wrong
- B. Even if educational, if it includes promotional elements and broad distribution, it becomes an advertisement subject to regulation.
- C. Correspondence is typically personalized communication with existing clients or a limited number of prospects.
- D. Public relations material that promotes the firm's services often falls under the definition of an advertisement.
IA Advertisement Definition
Under the Uniform Securities Act, an advertisement for an investment adviser generally includes any written communication offered to more than one person, or any notice or circular, that offers investment advisory services.
- Includes mass media like newspapers, magazines, websites.
- Even educational content can be an advertisement if it promotes the firm/IAR.
- Subject to specific content, filing, and record-keeping rules.
Memory trick: ADvertise Widely, Communicate Closely.