The Department helps FINRA members understand and apply these advertising rules through its filings review program, published guidance and outreach. Through its filings review program, the Department reviews communications submitted by firms either voluntarily or as required by FINRA Rule 2210 and provides firms with a written review for every communication submitted.
FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see FINRA OGC Interpretative Guidance for more information.
OGC staff contact: Joe Savage
1735 K Street, NW
Washington, DC 20006
FINRA Requests Comment on Proposed New FINRA Rule 3190 to Clarify the Scope of a Firm’s Obligations and Supervisory Responsibilities for Functions or Activities Outsourced to a Third-Party Service Provider
Extension of Effective Date of NASD Uniform Branch Office Definition and Certain Form BR and Form U4 Filing Requirements from May 1, 2006 to July 3, 2006 Joint Interpretive Guidance from NASD and the NYSE Relating to Uniform Branch Office Definition Under NASD Rule 3010(g)(2) and NYSE Rule 342.10
SEC Approves Amendments to Rule 2711 to Prohibit Research Analysts from Participating in a Road Show and from Communicating with Customers in the Presence of Investment Banking Personnel or Company Management about an Investment Banking Services Transaction
A member firm may include pre-inception index performance data in institutional communications concerning registered open-end investment companies, subject to the stated conditions discussed in the letter.
A member firm that provides services to Non-ERISA Plan participants and beneficiaries may rely on the filing exclusions contained in Rule 2210(c)(7)(B) and (C) in preparing and distributing a “Model Disclosure” as described in the letter, subject to the stated conditions and obligations discussed in the letter.
Direct Participation Programs Representatives are eligible to sell shares of a non-listed business development company that qualifies as a regulated investment company under the Internal Revenue Code at the time of sale.
NASD Rule 2110 - Standards of Commercial Honor and Principles of TradeMember ceasing to offer retail brokerage accounts with investment advisory and prime brokerage services may use negative response letters to accomplish the bulk transfer of its retail brokerage accounts to a newly formed broker-dealer.
NASD Rule 2110 - Standards of Commercial Honor and Principles of Trade
Member whose firm will cease to exist upon merger with an acquiring member that does not generally offer retail brokerage services may use negative response letters to accomplish the bulk transfer of its retail accounts to a broker-dealer affiliate of the acquiring member.
Negative response letters may be used to change the broker-dealer of record for customers' "direct application" mutual fund and variable annuity accounts in situations involving the acquisition or merger of a member firm, where the acquiring or surviving entity is the legal successor-in-interest to the member firm.
Joint NASD and NYSE interpretation that individuals involved in the development of certain quantitative equity research ratings model are not “research analysts” as defined by the SRO research analyst conflict of interest rules.
Member that serves as investment consultant and sub-administrator for certain mutual funds, but does not serve as either the principal underwriter or an investment adviser or sub-adviser to the funds, may state in its public communications that it does not offer proprietary products.
Negative response letters may be used for a bulk transfer of customer accounts to a broker-dealer that will provide certain trading services that have been discontinued by member, provided the letters contain the disclosures described in Notice to Members 02-57.
The use of negative response letters to transfer customers from one introducing broker/dealer to another may conflict with a member's obligation to observe high standards of commercial honor and just and equitable principles of trade.
The use of negative response letters to transfer customers serviced by "independent contractor" registered representatives from one introducing broker dealer to another may conflict with a member's obligation to observe high standards of commercial honor and just and equitable principles of trade.
The limited supervisory functions that can be properly delegated to registered representatives also may be assigned to persons registered as Foreign Associates under NASD Rule 1100. Foreign Associates, however, may not perform the functions that require a principal registration.
The use of negative response letters to transfer customers from one introducing broker to another may conflict with a member's obligation to observe high standards of commercial honor and just and equitable principles of trade.
NASD Regulation Department of Enforcement will not, unless directed otherwise, institute enforcement action against NASD member firms that send group e-mails to two or more existing or prospective customers that qualify as "institutional accounts" under Rule 3110(c)(4) or existing customers that qualify as "qualified purchasers" under Section 3(c)(7) of the Investment Company Act of 1940 without securing prior approval by a registered principal of those communications, subject to the condition that the firms supervise and review the group e-mails in accordance with the standards of Rule 3010(d).
Rule 2220 was intended to apply only to standardized options; therefore, advertisements, educational material and sales literature regarding conventional options need not be submitted to the Department for pre-use review and approval. However, advertisements, educational material and sales literature regarding conventional options remain subject to the general standards in both Rules 2210 and 2220 that prohibit untrue, false or misleading statements.
NASD members and associated persons who are required to use hypothetical illustrations under New York State's Regulation 60 with respect to internal and external replacements of life insurance and annuity contracts, would not be prevented under NASD Rule 2210 from using such illustrations. However, any use beyond what is required by Regulation 60 may require the illustrations to be filed with NASD Regulation as sales literature.
The use of a combined name on certain public communications to reflect a recent merger of two member firms and create a single global "brand," would not violate the requirement of Rule 2210 that public communications include the name of the member firm.
The use of a member name without the corporate modifier “L.L.C.” on certain materials adequately denotes the name of the member and would not violate the requirement of NASD Rule 2210 (f)(2) to include a member name.
A broker/dealer is not required to register as branch offices under Rule 3010(g) non-public office locations where existing customers can use computer terminals to access their accounts and enter orders.
FINRA rules require that member's communications with the public be accurate, fair and not misleading. An investor considering the series of a broker-dealer, including a "discount" broker, should be informed of all factors material to his use of such broker-dealer's services. There are many variables in the charges and services offered by broker-dealers and it isn't reasonable to expect that every variation be included in media advertising, given the expense of such advertising. Relevant factors not included in advertisements should be communicated to persons responding, however. Certain items should be included in the advertisement itself, when the advertisement would be misleading in the absence of their disclosure.