Targeted Examination Letters

March 2011
 
Re: Spot-Check of Reverse Exchangeable Securities (Reverse Convertibles) Advertising and Sales Literature

 

NASD Rule 2210(c)(7) states that each FINRA firm's advertisements and sales literature are subject to a periodic spot-check procedure.  Pursuant to this procedure and in accordance with FINRA Procedural Rule 8210, the Advertising Regulation Department requests that you provide the following:
 

  1. All advertisements, sales literature, and institutional sales material as defined in NASD Rules 2210(a) and 2211(a), used from September 1, 2010 through February 28, 2011, that concern reverse exchangeable securities ("Reverse Convertibles").  This request is for general marketing material as well as material on behalf of specific Reverse Convertibles. Please note that this request excludes material that may have already been filed with the Advertising Regulation Department.  Please provide electronic copies of the material.
     
  2. A numbered tabular list identifying each communication provided pursuant to item 1 of this letter. Please also include the dates of distribution of each communication, the manner in which it was distributed, and, if applicable, an internal reference number. We request that this list be provided to us in electronic format. 
     
  3. Evidence that each communication provided pursuant to item 1 of this letter received written approval by a registered principal prior to use, as required by NASD Rule 2210(b)(1).  State the name and title of the registered principal who gave the approval and the date that the approval was given.
     
  4. The offering document for any specific Reverse Convertible discussed in the communications submitted pursuant to item 1 of this letter.
     
  5. The portion of your firm's written supervisory procedures applicable to the production, approval, and distribution of Reverse Convertible communications in effect during the subject time period (September 1, 2010 through February 28, 2011). 
     
  6. The completed "RESPONSE TO SPOT-CHECK REQUEST" form attached to this letter.
     

Please provide the information noted in items 1 through 6 no later than April 1, 2011.