19: COMMUNICATIONS WITH THE PUBLIC (51) Flashcards
Does retail communication posted on an interactive online forum need to be filed with FINRA
No
Does correspondence need to be filed with FINRA
No
Does retail communication posted online that requires a login to access need to be filed with FINRA
Yes
There’s no expemtion for requiring login to access
Define: correspondence
Any WRITTEN communitcation distributed or made available to 25 or fewer retail investors within any 30 calendar-day period.
do prospective customer count for “retail communication”
Yes
If send email to >25 prospective customers, retail communitcation (within 30 days)
T/F: principal approval is necessary for virtually all retail communications
True
Does a email sent to 10 muncipalities in 5 days offering underwriting sercives count as correspondence?
No
Communications with government entities, which includes municipalities, fall under the heading of institutional communications.
T/F: Communications with government entities, which includes municipalities, fall under the heading of institutional communications.
True
Does sales /advertising material have to be written by the principal?
No
Just approved by him
Can a principal review corresponsence communications after it’s taken place
Yes
FINRA rules state that principal review of correspondence can take place before or after use, in accordance with the member firm’s written procedures.
T/F: Any retail communication that makes a financial or investment recommendation would require filing with FINRA
True
T/F: In most cases, retail communications must be filed with FINRA while correspondence, regardless of the method of delivery, is not.
True
Under Options Clearing Corporation (OCC) rules regarding options communications with the public, if an educational piece making no projected performance figures or recommendations is distributed to customers, it
A)
can only be distributed to retail customers.
B)
need not be preceded by an options disclosure document (ODD).
C)
need not be approved by a registered options principal (ROP).
D)
can only be distributed to institutional customers.
Explanation
B) does not need an options disclosure document
A registered representative is preparing a PowerPoint slide presentation, to be delivered in a live seminar, for a group of invited institutional clients. To use the slides, they may have to be
A)
submitted to the SEC for review and approval.
B)
submitted to both FINRA and the SEC for preuse approval.
C)
approved by FINRA in writing.
D)
reviewed by a principal of the broker-dealer.
D) reviewed by principal of BD
Explanation
Communications material that is intended for use with institutional customers only need be supervised and reviewed by a principal of the member firm. Alternatively, if the member’s procedures do not require review of institutional communications, they must include a provision for the education and training of associated persons so that they will understand the firm’s requirements. Though FINRA can request spot checks of any material used to communicate with the public, submission of institutional communications to FINRA or the SEC for review or approval is not required.
LO 19.c
T/F: The U.S. government does not issue or back CMOs.
True
US gov does’nt issue or back CMOs
Your broker-dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies.
Is filing with FINRA required 10 days before or after the adversisment is used
10 days before first use or publication
Your broker-dealer has prepared an advertising piece for general distribution to all of its retail customers regarding numerous option strategies. Filing the piece with FINRA is
A)
required to occur no later than the end of the month during which it was used.
B)
required at least 10 business days before first use or publication.
C)
required within 10 business days of the time it is first used or published.
D)
not required.
c) required 10 days before first use
Explanation
Filing with FINRA is required at least 10 business days before first use or publication for retail communications having to do with options.
LO 19.d
Does instutional communcations need to be preapproved by a principal?
No
“FINRA does not require principal preapproval of institutional communications. The same is true for internal communications. “
onmembers of a syndicate who are assisting in its sale of bonds buy the bonds at a discount called
A) a net designated price. B) the basis price. C) a concession. D) a takedown.
C) concession
Explanation
Members of the syndicate buy the bonds at the offering price minus the takedown, and nonmembers buy at offering price minus a concession. The basis price is the yield to maturity.
LO 20.b
Pristine Brokerage Services, (PBS), accepted as a FINRA member firm seven months ago, is planning a direct mail campaign to several thousand potential investors. The topic of the campaign deals with owning real estate through direct participation programs. Under FINRA Rule 2210 on communications with the public, this is considered
A)
a retail communication and must be filed with FINRA at least 10 business days before first use or publication.
B)
correspondence and needs review, not approval by a designated PBS principal.
C)
a retail communication and must be filed with FINRA within 10 business days of first use or publication.
D)
a retail communication that needs approval, but not filing, by a designated PBS principal.
A) retail communication, filled with finra at least 10 days before first use
> company is within first year of membership
so any retail communication must be filed with FINRA 10 days before use
“Explanation
The key here is that PBS is within its first year of membership. As such, any retail communications (and a communication to more than 25 existing and/or potential clients within a 30-day period is retail communications) must be filed with FINRA at least 10 business days before first use. Retail communications must be approved by a designated principal before filing with FINRA. A more complete answer would have had both the approval and the filing, but sometimes a test question focuses on a single point such as this one does.”
T/F: Municipal securities advertisements must be approved by a municipal securities or general securities principal.
True
Approved my muni securities or general securities principal
Does retatil communications posted on an online interactive forum need to be filled with FINRA?
No, not need to be filed with FINRA
Regarding the “short swing” rule. If an affiliate of a public company realizes a profit within 6 months from swing trades, he must return any profit to the issuer
True
If affiliate makes “short swing” money, has to return profits to issuer
T/F: Under Regulation A, an offering of $20 million or less in a 12-month period is a Tier 1 offering. Unlike a Tier 2 (up to $50 million) offering, there are no restrictions based on net worth or net income
True
“Under Regulation A, an offering of $20 million or less in a 12-month period is a Tier 1 offering. Unlike a Tier 2 (up to $50 million) offering, there are no restrictions based on net worth or net income”
