COMMUNICATIONS

General

SEC Approves Amendments to Rules Governing Communications With the Public. 

The SEC has approved amendments to FINRA rules governing communications with the public. The amendments revise the filing requirements in FINRA Rule 2210 (Communications with the Public) and FINRA Rule 2214 (Requirements for the Use of Investment Analysis Tools) and the content and disclosure requirements in FINRA Rule 2213 (Requirements for the Use of Bond Mutual Fund Volatility Ratings).

FINRA Regulatory Notice 16-41 (October 2016): SEC Approves Amendments to Rules Governing Communications With the Public.

Podcasts

• Communications with the Public Rule Amendments
   Listen Now/Download | 13 min. 

 

Rule Change to Transfer NASD Interpretive Material 2210-2 into the Consolidated FINRA Rulebook as FINRA Rule 2211 (Communications with the Public About Variable Life Insurance and Variable Annuities) 

As part of the process of developing a new Consolidated FINRA Rulebook, NASD Interpretive Material 2210–2 (Communications with the Public About Variable Life Insurance and Variable Annuities) has been transferred into the Consolidated FINRA Rulebook as FINRA Rule 2211 (Communications with the Public About Variable Life Insurance and Variable Annuities) without any substantive changes.

Securities and Exchange Act Release No. 78851 (September 15, 2016), 81 FR 64969 (September 21, 2016) (File No. SR-FINRA-2016-036): Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Adopt NASD Interpretive Material 2210-2 as FINRA Rule 2211 (Communications with the Public About Variable Life Insurance and Variable Annuities) in the Consolidated FINRA Rulebook

 

Educational Communications on Recruitment Practices When Representatives Change Firms

The SEC approved the adoption of FINRA Rule 2273 (Educational Communication Related to Recruitment Practices and Account Transfers), which establishes an obligation to deliver an educational communication in connection with firm recruitment practices and account transfers. The rule became effective on November 11, 2016.

FINRA Regulatory Notice 16-18 (May 2016):  SEC Approves Rule Requiring Delivery of an Educational Communication to Customers of a Transferring Representative
Educational Communication:  Issues to Consider When Your Broker Changes Firms
Broker-Dealer Recruitment Disclosures:  Complying with FINRA Rule 2273
FAQs Regarding FINRA Rule 2273

 

FINRA Provides Guidance on Rules Governing Communications with the Public

In April 2014, FINRA launched a retrospective review of its communications with the public rules to assess their effectiveness and efficiency. In December 2014, FINRA published a report on the assessment phase of the review. The report concluded that, while the rules have met their intended investor protection objectives, they could benefit from some updating to better align the investor protection benefits and the economic impacts. To this end, FINRA staff recommended a combination of rule proposals, guidance and administrative measures. Pursuant to these recommendations, FINRA has published additional questions and answers on the Advertising Regulation page on the FINRA website. These questions and answers supplement previously published guidance.

FINRA Regulatory Notice 15-17 (May 2015):  Guidance on Rules Governing Communications With the Public

FINRA Regulatory Notice 13-03 (January 2013):  FINRA Provides Guidance on New Rules Governing Communications With the Public

Podcasts

• Communications with the Public Consolidated Rule – Part 1
   Listen Now/Download | 6 min. 35 sec

• Communications with the Public Consolidated Rule – Part 2
   Listen Now/Download | 5 min. 55 sec

 

Extended Hours Trading Risk Disclosure

FINRA reminds firms of their obligations under FINRA Rule 2265 (Extended Hours Trading Risk Disclosure) to disclose to a customer the material risks of extended hours trading. This disclosure should include the risks described in the Model Extended Hours Trading Risk Disclosure Statement in Rule 2265 as well as any additional disclosure as necessary to address product-specific or other specific needs.

• FINRA Regulatory Notice 14-54 (December 2014):  FINRA Reminds Firms of Extended Hours Trading Disclosures

 

Social Networking Websites and Business Communications

FINRA offers a podcast on how FINRA Rule 2210, which became effective in 2013, applies to social media and personal electronic devices such as smartphones.

Podcasts

• Electronic Communications with the Public - Part 1
   Listen Now/Download | 8 min. 27 sec.

• Electronic Communications with the Public - Part 2
   Listen Now/Download | 6 min. 9 sec.

FINRA issued Regulatory Notice 11-39 to provide guidance to firms on how FINRA’s rules apply to business communications through social media sites and other new technologies, including personal devices. The guidance covers recordkeeping, suitability, communications with the public, supervision and other compliance concerns.

FINRA Regulatory Notice 11-39 (August 2011):  Guidance on Social Networking Websites and Business Communications