An agent in Tampa posts a TikTok video showing a screenshot of one client's 47% return last quarter, captions it "this could be you," and tags her firm. Within 72 hours her CCO has frozen her account, the state Administrator has opened a file, and her U4 will carry a disclosure for ten years. Three rules died in that 15-second clip. This lesson tells you which three.
Under NASAA Model Rule 502(b) and parallel state adoptions, a "communication with the public" is any written, electronic, or oral message distributed or made available to customers or prospects. Three buckets matter on the exam.
- Correspondence. Written or electronic messages sent to 25 or fewer retail prospects within any 30 calendar-day window. One-to-one emails, individual letters, and personal texts fall here.
- Retail communications. Any written or electronic message sent to more than 25 retail prospects in 30 days. Advertisements, brochures, mass-emailed newsletters, public websites, and social-media posts visible to the general...
- Institutional communications. Messages sent only to institutional investors (banks, insurance companies, registered IAs, plans with $50M+, etc.).
Common mistakes
- Counting "25 or fewer" as the retail threshold. The rule is "more than 25 in 30 days" triggers retail communication treatment. Exactly 25 stays in correspondence. The exam will test the boundary.
- Applying 3-year retention to IAs. BDs keep 3 years; IAs keep 5 years. Performance ads run 5 years from last use of any related advertisement.
- Treating likes and shares as neutral. A "like," share, or favorable comment on a third-party post is adoption or endorsement. The content becomes the registrant's own communication subject to full rules.
Bottom line
- Retail communications require written principal approval before first use; correspondence is supervised, not pre-approved.
- More than 25 retail recipients in 30 days converts correspondence into retail communication (exactly 25 stays correspondence).
- Recordkeeping: BDs retain 3 years, state IAs retain 5 years (first 2 easily accessible or on-premises); performance ads run 5 years from last use of any related ad.
- NASAA prohibits guarantees, unsupported projections, cherry-picked performance, misleading testimonials, and implied regulator endorsement.
Exam shortcut
When the question shows a number of recipients, count first. Over 25 retail in 30 days equals retail communication equals pre-use principal approval. At or under 25 equals correspondence equals supervised but not pre-approved. For social-media questions, identify static vs. interactive in the first read. Profiles, bios, pinned content equal static (pre-approval). Live replies, comments, DMs equal interactive (supervision).
The full lesson (about 2,504 words, 17 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- G17
- G18
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