ch 19

Question 1

correspondence

Answer 1

• written communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar day period
• includes current and prospectives investors
• pre or post review of a principal , align with firm’s procedures

Question 2

retail communication

Answer 2

• any written communication that is distributed to more than 25 retail investors within 30 calendar day period
• typically principal must approve before its use or filing
• electronic bulletin boards count - each post doesn’t require approval

Question 3

institutional communication

Answer 3

• written comm to institutional accounts
• any investor that isn’t defined as institutional is considered retail
• do not require principal review before first use but must follow firm’s procedures

Question 4

public appearance

Answer 4

• unscripted and doesn’t classify as correspondence, retail or institutional comms
• follow procedures
• preapprvoal may be required but not mandated, but any materials if seen by more than 25 people are considered retail and must be reapproved

Question 5

independently prepared reprint (IPR)

Answer 5

• article reprint
• prepared by independent publisher and NOT altered by member (can only alter to make it consistent with regulatory standards or correct errors)
• preapproved by principal but no FINRA filing
• quiet period at least 10 days

Question 6

research reports

Answer 6

• prepared by analyst for investment advisor or BD
• generally will recommend buying, selling, holding and investment
• must be preapproved if a retail comm
• must reflect analyst’s honest views
• fall outside the definition of research report: discussion of broad based indices, commentary on political, economic or market conditions, tech analysis on S&D, stat summaries, notices of ratings changes

Question 7

quiet period

Answer 7

• date of the offering to be the later of the effective date of the registration statement or the first date on which the securities were bona fide offered to the public

Question 8

SEC rule 135A

Answer 8

• generic advertising promotes securities as an investment, but doesn’t refer to a specific one
• must contain name and address of the sponsor, but NEVER the name of a specific security
• can only advertise types of securities the firm offers

Question 9

SEC rule 156

Answer 9

• unlawful to use sales lit that is materially misleading, fails to disclose

Question 10

names rule

Answer 10

• must invest at least 80% of assets in the type of investment suggested by its name

Question 11

filing requirements

Answer 11

• new FINRA members (1 yr or less) must file any retail comm at least 10 business days before first use with FINRA
• after 1 yr, member may file retail comm within 10 business days of first use
• retail comm must be kept on files for 3 years

Question 12

bond mutual fund volatility rating

Answer 12

-issued by 3rd party
- relates to the sensitivity of the NAV of a portfolio of open end management investment company that invests in debt securities to changes in market conditions and the general economy
- based on: credit quality of holdings, market price vol, fund perf, risks - interest rate, prepayment, FX

Question 13

CMO

Answer 13

• multi class debt instruments backed by a pool of mortgages (GInnie Mae)
• customer edu before a member can sell to retail customer

Question 14

options comm

Answer 14

• retail comms on options must file copies with FINRA 10 calendar days before first use if the OCC disclosure booklet has not been delivered