A rep emails a variable annuity pitch to 40 prospects and posts a fund performance chart online. Two different rules, two different approvals, two different filing clocks. Get the category wrong and the whole campaign is a violation before anyone reads it.
You seek business four ways: in person, by telephone, by mail, and electronically. Each channel is a communication the firm must supervise. The medium does not change the rule. A misleading claim spoken at a seminar is judged the same as a misleading claim in a brochure.
Promotional and advertising materials must clear approval before distribution. The author drafts, a registered principal reviews, and only then does it go out. For most retail-facing pieces, that approval is mandatory and documented with the principal's name and date.
KEY: "Before distribution" is the operative phrase. Principal approval of a retail communication happens before first use, never after the fact.
Every written or electronic communication falls into one of three buckets. The bucket sets who approves it and when it is filed.
Common mistakes
- Reversing the 25-person threshold. Correspondence is 25 or fewer retail investors in 30 days; retail communication is more than 25. A form letter to 26 retail investors needs pre-approval.
- Flipping the new-firm filing timing. New member firms file 10 business days before first use; established firms file within 10 business days after. The exam swaps these constantly.
- Showing gross performance in a Rule 482 ad. Standardized return must be net of the maximum sales load and must include the expense ratio. Omitting either is a violation even if a prospectus offer appears.
Bottom line
- Retail communication is more than 25 retail investors in 30 days and needs principal approval before first use; correspondence is 25 or fewer and needs supervision, not pre-approval
- Institutional communication goes only to institutional investors, no pre-approval, but written supervisory procedures still apply
- New member firms file retail communications at least 10 business days before first use; established firms file within 10 business days after
- Variable annuity, variable life, and investment company performance communications are filed with FINRA; mutual fund and VA performance is always pre-use filing territory
Exam shortcut
Count retail heads first. More than 25 retail investors in 30 days equals retail communication equals principal approval before first use. Institutional-only or 25-or-fewer skips pre-approval. Map the rule by product. Variable contracts to 2211, deferred VA suitability to 2330 (7 business days), fund rankings to 2212, bond volatility to 2213, fund performance ads to SEC Rule 482. Read "before or after" on filing.
The full lesson (about 2,818 words, 19 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- A1
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