NASAA Series 63Communication with Customers and ProspectsMedium
A registered agent of a broker-dealer frequently communicates with clients via email, providing market commentary and investment recommendations. Under the Uniform Securities Act (USA), which of the following best describes the broker-dealer's responsibility regarding these emails?
- AThe broker-dealer must obtain prior approval from the state Administrator for each email sent.
- BThe broker-dealer has no supervisory responsibility for emails sent by agents from their personal accounts.
- CThe broker-dealer is only responsible for supervising emails that contain specific security recommendations.
- DThe broker-dealer is responsible for establishing and maintaining a system to supervise and retain all such communications.
Show answer & explanationAnswer & explanation
Correct answer: D. The broker-dealer is responsible for establishing and maintaining a system to supervise and retain all such communications.
Broker-dealers have a comprehensive supervisory responsibility under the USA to ensure that all communications with the public, including emails from agents, comply with regulations. This includes establishing written procedures, training agents, and retaining copies of communications for review.
Why the other options are wrong
- A. Prior Administrator approval for every email is not a practical or typical requirement.
- B. Broker-dealers are responsible for supervising all business-related communications, even if originating from an agent's personal account, if those communications are related to the firm's business.
- C. Supervision extends to all business communications, not just those with specific recommendations.
Supervision of Agent Communications
Broker-dealers and investment advisers must establish and maintain systems to supervise and retain all communications (e.g., emails, social media) between their agents/IARs and the public.
- Applies to all business-related communications.
- Includes review of content, recordkeeping, and training.
- Ensures compliance with anti-fraud and advertising rules.
Memory trick: Oversee Every Message, Retain Every Record.