S6: Marketing, Prospecting, & Sales Presentation Flashcards
Sale Literature
means any written communication generally available to the public, other than advertising, and must be accompanied by a prospectus
Selling Away
Private Securities Transaction
Engaging in a private securities transaction without first notifying your firm is a violation
Private Securities Transactions
- it is a violation of any NASD/FINRA rules for any person associated with the member firm to engage in Private Securities Transactions outside the firm is regular course of business without first informing their member in writing
- if APPROVED the transaction must be recorded on the books and records of the registered representatives firm & the firm shall supervise the persons participation as if it were executed on behalf of the member
- if DISAPPROVED the registered representative shall not participate in the transaction email her
Outside Business Activities
- no registered person of a member firm shall be employed by, or accept compensation from any other person as a result of any business activity, OTHER THAN PASSIVE
- prompt WRITTEN notice is required
Advertising is defined as:
any materials designed for use in the public medium to solicit business, such as radio, TV, newspapers etc.
Statement of Additional Information
SAI
-must be given (in addition to a prospectus) to any client upon request
Advertising Rules
- any written communication used to solicit the issues MUST be accompanied or proceed by a prospectus
- may NEVER contain an application to invest
Omitting Prospectus Rule
- permits material used prior to prospectus delivery
- such advertisements may NEVER contain an application to invest and must contain information regarding how to obtain a full prospectus
Communication Categories
Institutional Communications
-includes written (including electronic) Communication that is distributed or made available only to institutional investors
Institutional Investors
- bank
- investment advisor registered with the SEC
- any other entity with total assets of ate sat 50 million
- govt entity
- an employee benefit plan that has at least 100 participants
Communication Categories
Retail Communication
- includes any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar day period
- requires an appropriately qualified registered principal of the member firm to approve each retail communication before the earlier of its use or its filing
Communication Categories
Correspondence Communication
-includes any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar day period
Record Keeping
Communication Categories
-all retail and institutional communications records shall be kept in a separate file for a period beginning on the date of first use an ending 3 years from the date of last use
Broker/Dealers must keep records of all correspondence for _____ years
3
Hypothetical Illustrations
- using assumed rates of return may be used to demonstrate the way a variable life insurance policy operates
- an illustration may use any combination of assumed investment returns up to and including a gross rate of 12% provided that one of the returns is 0% gross rate
Telemarketing
- requires an organization that performs telemarketing to maintain a do not call list of customers who do not want to be called and keep a customer’s name on the list and INDEFINITELY from the time the request is made
- firms must probably identify themselves via caller ID, transmitting the telephone number, and when available by telephone carrier, the name of the member firm
-
Telemarketing
allowed time to call
8am - 9pm (local time at the called persons location)
Firms must follow their own Firm Specific Do Not Call List as well as the National Do Not Call List. The member firm must access the updated national do not call list a minimum every _____ days
31
Telemarketing rules do not apply to ______
your clients
The Cold Call rules do not apply to a person who has made an inquiry to the firm with in the previous ______ immediately preceding the date of the telemarketing call
3 months
Use of FINRA’s Name is ______
NOT allowed by allowed but FINRA
Sales literature that contains mutual fund performance information except for money market funds must contain total return data for _______ year periods
1, 5 and 10
If a firm uses materials to train or educate registered representatives of other broker-dealers (whether affiliated or not) the material would be considered an ________ communication
Institutional
The firm is required to approve prior to use all _______ communications
Retail
Testimonials
- If payment of more than $100 made the testimonial must disclose it is a paid testimonial
- the testimonial may not be representative of the experience of other customers
- the testimonial is no guarantee of future performance or success
Generic Advertising _______ to be be accompanied by a prospects
does NOT need
Shareholder Statements
(A complete financial statement must be provided ________ & _______ to mutual fund shareholders
semi-annually & annually
Each OSJ must be inspected ______
Annually
Each branch office that supervises one or more non-branch locations must be inspected ________
Annually
Branch offices that do not supervise one or more non-branch locations must be inspected every _______
3 years
OSJ
(As part of the inspection process a written report must be kept on file regarding each and every inspection for a minimum of ________
3 yrs
Private Securities Transactions
- new offerings of securities not registered with the SEC
- new direct participation offerings
- transactions among immediate family members for which the associated person receives selling compensation
Prospectus
- summary of registration statement
- Must be distributed to investors PRIOR or DURING any solicitation for sale of issuers securities
- on UNSOLICITED ORDERS, the prospectus must be given out no later than the TIME OF CONFIRMATION
- updated ANNUALLY
When soliciting mutual fund sales, you must give out a prospectus _______
at or prior to the time of your face to face sales presentation
If the sale is unsolicited, the prospectus must be delivered __________
no later than the time of the confirmation which is the day after the trade
Reporting Requirements
within 30 calendar days
- has been found to have violated any securities, insurance, commodities, financial
- and associated PERSON is a defendant in a civil litigation or arbitration and the judgment or award was for 15,000 or more
- A member FIRM is a defendant in a civil litigation or arbitration and the judgment or award was for 25,000 or more
All correspondence or retail communications must include:
- prominent disclosure of the firm’s name
- when the communication includes other names it must reflect which products and services are offered by the firm
- disclosure of any relationship between the firm and any nonmember or individual who is also named in the communication
THE DATE THE FIRM BEGAN FINRA MEMBERSHIP IS NOT REQUIRED
Securities Act of 1933
- paper act
- regulates new issues (primary offerings) of securities by the issuer to the general public
- requires issuer to file REGISTRATION STATEMENT with SEC prior to issuing its securities
- issuer must prepare a PROSPECTUS
- the prospectus must be distributed to investors PRIOR to or during any solicitation for sale of the issuers securities
SEC Registration Statement
- filed with SEC announcing the intent of the issuer to sell the security
- after filing, there’s a minimum 20 day cooling off period (no sales may occur)
Cooling Off Period
- the SEC will review the registration statement (20 days
- once the SEC has cleared the issue, sales can begin with a prospectus
Unsolicited Orders
- the prospectus must be given out no later than the time of confirmation
A prospectus is a ________
- summary of the registration statement
SEC Registration Statement
(The registration statement is filed with the Securities & Exchange commission announcing the intent of the issuer to sell a security)
After filing, there is a min _______ during which no sales may occur
-minimum 20 day cooling off period
During the cooling off period, the issuer & underwriting group formed to market the issue may take indications of cust interest concerning the issue.
A ______ or preliminary prospectus may be distributed to prospectus purchasers to solicit interest in the issue
- red herring
Sales of the issue are _______ until the issue has been cleared
- prohibited
Text Box
- standardized performance info (1,5,10 years)
- max sales charge
- annual expense ratio
Institutional communication does NOT include a firms _______
Internal communications
Retail Communications requires an appropriately qualified _______ of the member firm to approve each communication before the earlier if it’s use or its filing with FINRAs advertising
- registered principal
Record Keeping Requirements
(All retail & institutional communications records shall be kept in a separate file for a period beginning on the date of first use ending ________
- 3 yrs from the date of first use
New Member Firm Filing Requirements
(Requires a firm that has not previously filed with FINRAs advertising regulation dept to file its initial communication with the advertising regulation dept _________
-at least 10 business days prior to use
The 1 yr filing requirement begins __________
- in the date reflected in the CRD system that the firms FINRA membership becomes effective, rather than on the date a firm first files an advertisement with FINRA
The New Member Firm filing requirement ONLY applies to certain broadly disseminated ________ such as generally accessible websites, print media communications, & tv & radio commercials
-retail
Advertising concerning govt securities ________ have to be filed with FINRA within 10 business days of first use or publication
- do NOT
Use of the FINRA logo _______ allowed by anyone but FINRA
- is not
