Communications with the Public

FINRA Rule 2210 governs how broker-dealers communicate with the public. Understanding the three categories of communications and their requirements is essential for compliance.

Three Categories of Communications

FINRA Rule 2210 defines three types of written communications:

Category	Definition
Correspondence	≤25 retail investors in 30 days
Retail Communications	>25 retail investors in 30 days
Institutional Communications	Only to institutional investors

Correspondence

Correspondence is written communication to 25 or fewer retail investors within a 30-day period.

Examples of Correspondence

Personal emails to individual clients
Individual client letters
Small group communications
One-on-one messages

Requirements for Correspondence

Requirement	Detail
Principal Pre-approval	Not required
FINRA Filing	Not required
Supervision	Subject to firm review policies
Recordkeeping	Must be retained per rules

Supervision of Correspondence

While pre-approval is not required, firms must:

Establish written supervisory procedures
Review a sample of correspondence
Ensure compliance with content standards
Train representatives on requirements

Key Point: Correspondence has the lightest regulatory requirements because it reaches the fewest people.

Retail Communications

Retail communications reach more than 25 retail investors within a 30-day period.

Examples of Retail Communications

Type	Examples
Advertising	TV, radio, print ads, billboards
Sales Literature	Brochures, research reports, newsletters
Website Content	Public-facing web pages
Social Media	Public posts, advertisements

Requirements for Retail Communications

Requirement	Detail
Principal Pre-approval	Generally required
FINRA Filing	Required for certain types
Content Standards	Must be fair and balanced
Recordkeeping	Retain for 3 years

FINRA Filing Requirements

Communication Type	Filing Required?
New firm (first year)	Must file all retail communications
Options communications	Pre-file 10 days before use
Investment company rankings	Pre-file 10 days before use
CMOs and structured products	File within 10 days of first use

Content Standards for Retail Communications

All retail communications must:

Be fair and balanced
Provide sound basis for evaluation
Not contain exaggerated claims
Include required disclosures
Present risks alongside benefits

Institutional Communications

Institutional communications are distributed only to institutional investors.

Institutional Investors Include

Type	Examples
Financial Institutions	Banks, insurance companies
Registered Entities	Broker-dealers, investment advisers
Large Entities	Organizations with $50M+ in assets
Qualified Purchasers	As defined under securities laws

Requirements for Institutional Communications

Requirement	Detail
Principal Pre-approval	Not required
FINRA Filing	Not required
Content Standards	Must not be misleading
Recordkeeping	Must be retained

Why Lighter Requirements?

Institutional investors are presumed to be:

More sophisticated
Better able to evaluate information
Less in need of regulatory protection
Capable of asking clarifying questions

Important: If institutional communication becomes accessible to retail investors, it must be reclassified and treated as retail communication.

Content Standards (All Communications)

General Standards

All communications must:

Standard	Requirement
Fair and Balanced	Present risks and benefits equally
Not Misleading	No false or exaggerated claims
Sound Basis	Based on accurate information
Clear	Understandable by target audience

Prohibited Content

Prohibition	Example
Guarantees	"Guaranteed 10% return"
Exaggeration	"Best performing fund ever"
Predictions	"Stock will definitely rise"
Misleading Omissions	Stating benefits without risks

Required Disclosures

Depending on content, may need to disclose:

Past performance is not indicative of future results
Investment risks
Conflicts of interest
Source of information
Date of publication

Social Media

Social media communications are subject to FINRA rules.

Classification of Social Media

Type	Classification
Static content	Retail communication (if public)
Interactive/real-time	May be correspondence
Direct messages	Correspondence

Social Media Considerations

Issue	Guidance
Third-party posts	Firm liable if adopted/entangled
Testimonials	Must comply with SEC rules
Hyperlinks	May adopt linked content
Personal accounts	Subject to firm supervision

Recordkeeping Requirements

Retention Periods

Record Type	Retention
Communications	3 years (2 years easily accessible)
Complaints	4 years
FINRA correspondence	Varies by type

What Must Be Retained

All retail communications
Samples of correspondence (per firm policy)
Institutional communications
Approval records
Filing confirmations

Supervision and Approval

Principal Responsibilities

Function	Principal Role
Pre-approval	Review before use (retail)
Training	Ensure reps understand rules
Monitoring	Review samples of correspondence
Enforcement	Address violations

Supervisory Procedures

Firms must have written procedures for:

Reviewing communications before use
Sampling correspondence for review
Filing required communications
Training representatives
Addressing violations

Key Takeaways

Three categories: Correspondence, Retail, Institutional
Correspondence: ≤25 retail investors, lightest requirements
Retail Communications: >25 retail investors, filing/approval required
Institutional: Only to institutions, lighter requirements
All must be fair, balanced, and not misleading
Social media is subject to communication rules
Firms must retain records for 3 years
Reclassification required if audience changes

Securities Industry Essentials

Introduction

Chapter 1: Knowledge of Capital Markets

Chapter 2: Understanding Products and Their Risks

Chapter 3: Trading, Customer Accounts and Prohibited Activities

Chapter 4: Overview of Regulatory Framework