STUDY FINRA'S RULES ON COMMUNICATIONS WITH CUSTOMERS BEFORE TAKING THE SERIES 6 EXAM

Candidates for the Series 6 Exam must use care in studying FINRA's rules on Communications with Customers. These rules are involved and must be studied carefully. For example, can you explain the difference between retail communications and correspondence? Or are they the same thing treated in the same way? 

Retail communications need to be filed with FINRA's Advertising Regulation Department, but correspondence does not need to be filed. However, both retail communications and correspondence need the written and dated approval of a principal of the brokerage firm before they may be used.

So communications with the retail public gets complicated!

Bob Eder in his Study for the Series 6 Exam devotes all of Chapter One to Communications with Customers. Here is a sample of Bob Eder's treatment and discussion:

PRACTICE QUESTION

FINRA has specific strict rules regarding the use of retail communications. June is a representative. She considers some of the definitions included in FINRA Rule 2210 on retail communications. Which of the following is a correct expressions of FINRA's Rule?

a.                   a retail communication is any written communication sent, distributed, or made available to 25 or fewer retail investors within any 30 calendar-day period

b.                   correspondence means any written or electronic communication that is distributed or made available to more than 25 retail investors within any 30-day period

c.                    before a brokerage allows retail communications to be sent either to the public or to the FINRA Advertising Regulation Department for approval, a registered principal of the firm must approve it in writing, and sign and date the record of approval

d.                   a retail investor includes an institutional investor, such as a bank, insurance company, or trust company

The answer is (c). The one true statement about FINRA's rule says that before a registered person may use any retail communication with the public, or submit it to the Advertising Regulation Department of FINRA, a registered principal must approve it in writing. As to retail communications and correspondence, the question reverses the definition for the two. Retail communication means any written or electronic communication that a securities professional distributes to more than 25 retail investors within any 30-day period. Correspondence means any written communication that a securities professional distributes to not more than 25 retail investors within any 30 calendar-day period. A retail investor does not include an institutional investor, such as a bank or trust company.

Here is the link to FINRA's Content Outline for the Series 6 Exam. See the references to Communications with Customers in FINRA's Series 6 Content Outline, Section 1.1.

Study for the Series 6 Exam is available from Amazon in both paperback and Kindle e-book versions. Here is the link for Bob Eder's Study for the Series 6 Exam on Amazon.

See Bob Eder's Author Page on Amazon.com.

For questions about Bob Eder's Study for the Series 6 Exam, or questions in general about the Series 6 Exam, such as Communications with Customers, feel free to email Bob Eder at bobeder@bobeder.net.

Bob Eder received his Juris Doctor (J.D.) degree from the University of Utah, Quinney College of Law, in 2001.