FINRA - Rules & Regulation - Advertising Regulation FAQ

1. What rules apply to communications with the public?

In general, FINRA members' communications with the public must comply with NASD Conduct Rule 2210 and Interpretive Materials under 2210.

Mutual fund, variable contract and Unit Investment Trust (UIT) advertising and sales literature are also subject to specific SEC rules as detailed in Question 7 below.

Options advertisements, educational material and sales literature should comply with NASD Conduct Rule 2220.

Municipal securities communications are governed by MSRB Rule G-21. Note that certain Municipal Fund Securities (529) Plans communications offering registered investment company products are subject to the filing requirements and content standards of Rules 2210 and 2211 and Interpretative Materials under 2210.

Please feel free to contact the Advertising Regulation Department to inquire about specific rule applications.

2. What rules apply to Institutional Sales Material and Correspondence?

FINRA member's communications distributed to institutional customers and all correspondence must comply with Rule 2211, the content standards of Rule 2210(d)(1) and the applicable Interpretive Materials under 2210.

3. What communications must be filed with the Advertising Regulation Department?

Please note that all submissions to the Advertising Regulation Department must be accompanied by the date of first use (or intended first use) of the material. Prior to submission, all material must be reviewed and approved by a registered principal and the name and title of the registered principal and the date that the approval was given must accompany each filing.

Each FINRA member firm who has never filed material with the Advertising Regulation Department must file all advertising at least 10 days prior to first use for one year. This one-year period dates from the department's receipt of the first submission.

Registered Investment Companies - All investment company (mutual funds, variable contracts, and unit investment trusts) advertisements and sales literature must be filed within 10 days of first use or publication. Generic and mutual fund family corporate image sales communications are not exempted from this filing requirement and thus, must be filed. Note that written or electronic form letters concerning investment companies prepared for delivery to 25 or more prospective retail customers must be filed.

DPPS - Advertisements and sales literature concerning public direct participation programs must be filed within 10 days of first use or publication.

Government securities - Advertisements for government securities must be filed within 10 days of first use.

Options - Advertisements and all educational material for options used prior to delivery of the Options Disclosure Document must be submitted for review at least 10 days prior to use. The options material must not be used prior to final approval by the Department.

CMOs - Advertisements concerning collateralized mortgage obligations must be filed for review at least 10 days prior to use and can not be used until changes specified by the Department have been made.

Security Futures - Advertisements concerning security futures must be filed at least 10 days prior to use and can not be used until changes specified by the Department have been made.

Rankings - Advertisements and sales literature that use rankings or performance comparison information that is not generally published or is created by the investment company, its underwriter or affiliate, must be filed with corroborating data at least 10 days prior to use and can not be used until changes specified by the Department have been made.

TV and Video - Advertisements filed in draft version or "storyboard" must also be filed in its final filmed version within 10 days of first use or broadcast.

Bond Mutual Fund Volatility Ratings - Sales literature containing bond mutual fund volatility ratings must be filed at least 10 days prior to use. If disapproved by FINRA the material must be re-filled and must not be used until FINRA approval is received.

Municipal Funds Securities (529 Plans) - Advertisements and sales literature of certain 529 Plans communications offering registered investment company products must be filed within 10 days of use. See: Special Notice to Members (NTM) 03-17.

Investment Analysis Tools - Templates for written reports and sales material concerning investment analysis tools must be filed within 10 days of first use. Communications relating to or produced by the tool meeting the criteria for "institutional sales material" need not be filed. Access to the investment analysis tool must be provided and members must provide any supplemental information requested by the Advertising Regulations Department. See: Notice to Members (NTM) 04-86.

Summary of NASD Conduct Rules 2210(c) and 2220(c)
Filing Requirements for Advertising and Sales Literature¹

Who	What	When	Conduct Rule
Members who have never filed	All advertisements	10 days prior to first use for one year dating from the first submission	2210(c)(5)(A)
All members	Options communications used prior to the delivery of the Options Disclosure Document²	10 days prior to first use; wait for FINRA staff approval	2220(c)(1)
All members	Sales literature that contains bond mutual fund volatility ratings	10 days prior to first use; wait for FINRA staff approval	2210(c)(3)
All members	CMO advertisements³	10 days prior to first use; cannot use until changes required by the Department have been made	2210(c)(4)(B)
All members	Investment company advertisements or sales literature that use rankings or performance comparison information that is not generally published or is created by the investment company, its underwriter or affiliate, must be filed with corroborating data	10 days prior to first use; cannot use until changes required by the Department have been made	2210(c)(4)(A)
All members	Investment company advertisements and sales literature	Within 10 days of first use	2210(c)(2)(A)
All members	Public direct participation program advertisements and sales literature	Within 10 days of first use	2210(c)(2)(A)
All members	Security Futures advertisements.⁴	10 days prior to first use; cannot use until changes required by the Department have been made	2210(c)(4)(C)
All members	Final version of TV and Video advertisements	Within 10 days of first use or broadcast	2210(c)(6)
All members	Certain 529 Plans advertisements and sales literature offering registered investment company products⁵	Within 10 days of first use	2210(c)(2)(A)
All members	Government securities advertisements	Within 10 days of first use	2210(c)(1)
All members	Investment analysis tool, report templates, and sales literature and advertisements. ⁶	Within 10 days of first use	IM-2210-6(a)

¹ "Advertisements" are communications with the public that appear in media (e.g., newspaper, radio, television, web sites) whereas "sales literature" is directed to a specific audience or group (e.g., mailers, brochures, password protected web sites). For complete definitions see NASD Conduct Rule 2210(a).
² See Conduct Rule 2220 Options Communications with the Public.
³ See IM-2210-8 Communications with the Public About Collateralized Mortgage Obligations.
⁴ See IM-2210-7 Guidelines for Communications with the Public Regarding Security Futures.
⁵ See Special NTM 03-17 for additional guidance.
⁶ See NTM 04-86 for additional guidance

4. Under what other circumstances members would be required to submit sales communications to the Department?

Spot-Check submissions - In addition to the above filing requirements, members must submit specified written and electronic communications with the public, including items not subject to mandatory filing such as institutional sales material, correspondence, and research reports, upon written request from the Department. The material must be submitted within the time frame specified by the Department.

5. What sales material is not required to be filed with the Advertising Department?

Sales communications that need not be filed include the following:

Institutional Sales Material as defined.
Independently Prepared Reprints as defined.
Correspondence as defined.
Press releases distributed only to members of the media.
Municipal securities (Note that certain Municipal Funds Securities (529 Plans) communications offering registered investment company products must be filed (See: Special Notice to Members 03-17).
Research reports.
Updates to data in a previously filed material without material change, e.g., new telephone numbers, current performance, and new addresses.
Current sales materials previously filed by another entity that have received a "clean" letter from the Department.
Material that simply lists products and services.
Prospectuses and other offering documents. Please note that while not required filings, staff may request, or members may include with a filing, the prospectus of the product covered in the material being reviewed.
Sales material that contains only an incidental reference to an investment analysis tool (e.g. a brochure that merely mentions a member's tool as one of the services offered by the member) unless otherwise required by Rule 2210.

6. Can sales material be filed voluntarily?

Yes, members may voluntarily file sales material. Some reasons for filing voluntarily include:

When launching new products.
When using a new format or media such as TV or website.
To address compliance questions.
In response to rule changes.

7. What is the difference between Advertisements, Sales Literature, Institutional Sales Material and Correspondence for purposes of filing material with the Advertising Regulation Department?

Advertisement

With the exception of options communications, advertisement refers to a communication made available to the public through media such as radio, television, newspapers, magazines, billboards, telephone directory listings (beyond routine line listings), computer bulletin boards etc.

Sales Literature

Refers to communications made available to the public, which do not meet the definition of advertising. Sales literature includes circulars, market letters, research reports, form letters, seminar texts, and telemarketing scripts. The preceding chart includes filing requirements for advertisements and sales literature.

Institutional Sales Material

Institutional sales material is distributed or made available only to institutional investors. Any sales material that is available to the general public is considered advertisement or sales literature whether or not it is intended for distribution only to institutional investors. Institutional sales material is not a required filing. However, institutional sales material is subject to the content standards of Rule 2210(d)(1) and the applicable Interpretive Materials under Rule 2210.

Institutional investors are banks, savings and loan associations, insurance companies, registered investment companies, registered investment advisors, or any entity with assets of at least $50 million. Government entities, employee benefit plans and qualified plans with at least 100 participants, FINRA members and registered persons, and a person acting solely on the behalf of an institutional investor.

If a member has reason to believe that a communication or excerpt of the communication intended for institutional investors will be forwarded to or made available to a person that is not an institutional investor, the communication must not be treated as institutional sales material.

Note that, individual participants of employee benefit plans and qualified plans are not considered institutional investors.

Correspondence

Any written letter or electronic communication prepared for delivery to one or more current retail customers and less than 25 prospective retail customers within a 30-day period. Correspondence is not a required filing. However, correspondence is subject to the content standards of Rule 2210(d)(1) and the applicable Interpretive Materials under Rule 2210.

Complete definitions of advertisements and sales literature may be found in Rule 2210. For the definition of institutional sales material and correspondence see Rule 2211. For definitions applicable to options communications see Rule 2220.

8. What rules apply to communications for investment company products such as mutual funds, variable contracts and unit investment trusts (UIT)?

In addition to Rules 2210, 2211, and Interpretive Materials, mutual fund, variable contract and UIT materials must comply with the following SEC rules as applicable:

SEC Rule 134, Rule 134 no longer applies to investment companies (as of November 15, 2003). The rules applicable to investment companies are as follows:

SEC Rule 482, the "Omitting Prospectus Rule", permits material used prior to prospectus delivery. The communication must offer the full prospectus. Rule 482 communications carry prospectus liability. In addition, Rule 482 contains: specific standards for the presentation of mutual fund and variable annuity performance data; required disclosures; as well as prominence, proximity, type size and style requirements for certain information.

SEC Rule 34b-1 applies to mutual fund and variable annuity communications which include performance data and are used with the fund's prospectus. This rule requires that the performance data comply with the specific standards set forth in Rule 482. SEC Rule 135a permits a generic communication on behalf of investment company products. The rule permits a general discussion of product attributes as long as the presentation does not include the name of a specific product or any information relating solely to a specific product.

9. Does FINRA provide sample advertisements for use by its member firms?

In general, FINRA does not provide sample advertisements, as we believe they would restrict creativity by implying that there is only one correct way to advertise a given product. However, in situations where a serious regulatory concern exists, we will publish examples or prototype advertisements.

10. Are there any filing fees involved in the submission of material to the Advertising Regulation Department?

Yes. As set forth in Section 13, Schedule A of FINRA By-laws, our filing fees are as follows for each item of advertising or sales literature:

Regular Filings:

$ 100.00 for the first ten pages of material.
$ 10.00 for each additional page.
$ 100.00 for the first ten minutes of each video and audio item.
$ 10.00 for each additional minute of each video and audio item.

Expedited Filings:

$500.00 for all requests for expedited review for the first ten pages/minutes; and
$ 25.00 per page/minute in excess of the first ten pages/minutes

You now have several payment options with respect to the Advertising Regulation filing fees. You can use any of these options to establish an Advertising Filing Fee Account.

A. CRD Account Payment Transfer

You may have us deduct filing fees from your existing CRD account by providing us with written authorization. Please fax, email suprina.hicks@finra.org or mail your written authorization to Suprina Hicks. Fax #: 240-386-4568.

B. Credit Card Payment

We accept credit cards for payment of your filing fees (VISA, Master Card or American Express). You may download the credit card processing form pdf or request a copy from Suprina Hicks at 240-386-4537.

C. Wire Payments

Funds may be wired for payment of filing fees and/or to replenish your Advertising Regulation account. Please contact Suprina Hicks at (240) 386-4537 or download the Wire Transfer Instructions Form from FINRA.org.

D. Check Payment

Checks can be sent by regular mail or by courier/overnight delivery. Checks sent by regular mail must be sent to the P.O. Box address provided below. All checks sent by courier or overnight delivery must be sent to the alternative address provided below, as the P.O. Box address will not accept courier or overnight deliveries. We encourage the use of the P.O. Box address as it facilitates more timely automated processing of your remittance.

Please send filing fee CHECKS to:

FINRA
Advertising Regulation
P.O. Box 7777-W9075
Philadelphia, PA 19175-9075

(Note: P.O. Box does not accept
overnight/courier deliveries) For courier/overnight CHECKS only:

FINRA
Advertising Regulation
W9075
c/o Mellon Bank, Room 3490
701 Market Street
Philadelphia, PA 19106

Please continue to send all sales communications being submitted for review to:

FINRA
Advertising Regulation
9509 Key West Avenue, 5th Floor
Rockville, MD 20850-3389

Please contact Suprina Hicks at 240-386-4537 with questions about filing fees.

11. How do I access my Advertising Regulation Fee Account statement?

Your Advertising Regulation Fee Account statement can only be viewed via the Advertising Regulation Electronic Files (AREF). You may view, in real time, an online listing of past and current fee statements or download selected statement(s).

12. How will the Advertising Regulation Department respond to the material that has been submitted for review?

The department provides a written "Review Letter" electronically via the Advertising Regulation Electronic Files (AREF) or via regular mail for all submissions. Review letters for expedited submissions will also be sent via FAX. The review letter provides necessary comments as to the compliance of the submission. In addition, the review letter documents the cost of the review.

Our expedited review service provides for a response within three business days (or other negotiated time period) after the day the material is received. Expedited responses will be faxed to FINRA member firm no later than close of business on the third review day. However, response time for regular submissions may vary depending on filing volume received by the Department.

13. Where should material be submitted?

All correspondence should be mailed to:

FINRA
Advertising Regulation Department
9509 Key West Avenue
Rockville, MD 20850-3389
All requests for expedited review should include FINRA member's FAX number.

14. Can material be faxed to the Advertising Regulation Department?

Provided your firm has an Advertising Regulation Department Filing Fee Account and sufficient fees are in the account, you may fax submissions to us at (240) 386-4568. Please contact the department in advance if sending more than 10 pages. 15. Where can I find information on how to file electronically?

You may find information on how to file electronically at FINRA Regulation website www.finra.org. Follow the links to Rules and Regulations; Advertising Information and Advertising Regulation Electronic File. In addition to information on electronic filing, the Advertising Information area provides useful information on administrative procedures, interpretive guidance and regulatory resources.

15. Where can I find information on how to file electronically?

You may find information on how to file electronically at FINRA Regulation website www.finra.org. Follow the links to Rules and Regulations; Advertising Information and Advertising Regulation Electronic File. In addition to information on electronic filing, the Advertising Information area provides useful information on administrative procedures, interpretive guidance and regulatory resources.