A fund brochure is a public communication that can contain accurate numbers and still mislead customers. Your job is to check its audience, overall message, disclosures, and required approvals before anyone receives it.
When contacting current and prospective customers in person, by telephone, by mail, or through electronic means, you speak for your broker-dealer. Use the firm's permitted channels and materials so supervisors can review and retain business communications.
Unwanted sales calls intrude on people at home, so telephone solicitation rules limit whom you may call and when. Under Financial Industry Regulatory Authority (FINRA) Rule 3230, ordinary residential calling hours are 8 a.m. through 9 p.m., at the recipient's location. Exceptions include a qualifying account-based business relationship, prior express invitation or permission, or calling a broker or dealer. A recent inquiry alone does not create the calling-hours exception. FINRA Rule 3230.
A person who registers a number on the national registry has opted out of sales calls, so you may call only under a recognized exception.
Common mistakes
- Counting each email separately. Recipients add up across the rolling 30 calendar days (see Example 1).
- Applying the wrong calendar. The municipal form-letter window is 90 days; the retail-correspondence boundary uses 30 calendar days.
- Confusing two illustration limits. Tax-compounding comparisons stop at 10%; variable-life illustrations permit 12% and require a 0% case.
Bottom line
- Correspondence reaches up to 25 retail investors in 30 calendar days; retail communication reaches more than 25.
- Retail communications generally require principal approval before first use or filing, whichever occurs first.
- Principal approval, regulatory filing, and prospectus delivery are separate obligations.
- Rule 482 advertisements require fund disclosures and do not replace statutory prospectus delivery.
Exam shortcut
Before choosing a deadline, decide whether the question asks about principal approval, FINRA filing, or Rule 2330 transaction review. For a front-end load stated as a percentage of POP, divide NAV by one minus the rate. A choice equal to NAV times one plus the rate understates the price. Eliminate any choice claiming that a footnote or an accompanying prospectus cures a misleading claim.
The full lesson (about 4,614 words, 33 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- A1
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