5.a

Question 1

What are the three categories of communication with the public as defined by FINRA?

Answer 1

1. Institutional Communication
2. Retail Communication
3. Correspondence

Question 2

What is institutional communication and who is the audience?

Answer 2

• Definition: Any written communication that is distributed or made available only to institutional investors.
• Audience: Institutional investors, such as banks, insurance companies, registered investment companies, and any person with total assets of at least $50 million.

Question 3

What is the approval requirement for institutional communication?

Answer 3

Each firm can decide its own policy. It can either:
1. Require pre-approval by a principal before use.
OR
2. Allow for post-use review by a principal (no pre-approval needed).

If a firm allows for post-use review, it must provide education and training to its associated persons on institutional communications.

Question 4

What is retail communication?

Answer 4

Any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30-calendar-day period.

A retail investor is anyone who is not an institutional investor.

Question 5

What is the general approval requirement for retail communication?

Answer 5

A registered principal must approve all retail communication before it is used.

A copy must also be filed with FINRA.

Question 6

What is correspondence?

Answer 6

Any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30-calendar-day period.

Question 7

What is the approval requirement for correspondence?

Answer 7

Same as institutional communication. Each firm can decide to either:
1. Require pre-approval by a principal.
OR
2. Allow for post-use review by a principal.

(Note: ALL incoming correspondence must be reviewed by a principal, primarily to screen for complaints.)

Question 8

What are the overarching principles for all communications with the public?

Answer 8

All communications must be based on principles of fair dealing and good faith.

They must be fair and balanced, and may not contain exaggerated or misleading statements. Material facts or qualifications cannot be omitted if it would cause the communication to be misleading.

Question 9

What is the approval requirement for a representative’s social media content?

Answer 9

• Static Content (e.g., a website, blog, or profile page): Must be pre-approved by a principal before use.
• Interactive Content (e.g., individual posts or comments): Does not require pre-approval but is subject to the firm’s policies and post-use review.