RCA - July 1996 - Ask The Analyst - Internal Use Only Material

Q: Can a registered representative show or reference an "internal use only" piece in presentations to the public, assuming the piece has been filed with NASD Regulation and found consistent with standards? Assume also that the representative would not actually give the piece to the public, but merely use it as part of a presentation.

A: The answer to this question depends on how the material was first submitted to NASD Regulation for review, if a member firm is aware that information in a particular internal-use-only communication will be shown or presented to the public, this fact must be disclosed to NASD Regulation when the material is submitted. For example, the member firm's cover letter should disclose that the presentation is directed primarily to registered representatives, but it may also be shown to, or discussed with, the public. According to the Rules, NASD Regulation reviews internal-use-only material taking into consideration the intended audience of the communication (i.e., registered individuals) and the context in which the communication will be used. A change of audience or context would constitute a material change to a previously reviewed communication. Material changes to a communication that has already been reviewed and found consistent with standards by NASD Regulation may necessitate resubmission. For example, a member may choose to voluntarily submit to NASD Regulation an internal-use-only piece regarding mutual funds; however, if the firm then decides to use the same piece with members of the public, resubmission would be necessary for compliance with the filing requirements. For more information, see NASD Rule 2210 (formerly Article III, Section 35(c) of the Rules of Fair Practice) and "Ask the Analyst," Regulatory & Compliance Alert, January 1996, page 12.