The same email can need a principal's signature or none at all. What decides it is who receives it, and how many receive it within 30 days.
Financial Industry Regulatory Authority (FINRA) Rule 2210 sorts every written or electronic message a broker-dealer sends into three communication categories. Each category carries its own approval, filing and review duties, so you classify the audience first.
A retail investor is anyone who is not an institutional investor. It does not matter whether that person has an account with your firm.
- Retail communication: It is distributed or made available to more than 25 retail investors within any 30 calendar-day period. A website or a mass email is a typical example.
- Correspondence: It goes to 25 or fewer retail investors within any 30 calendar-day period. A letter to one client is a typical example.
- Institutional communication: It goes only to institutional investors. The firm's internal memos are not institutional communications.
The 30-day window rolls. Twenty retail recipients on Monday plus ten the next week make 30 within 30 days, so the piece is a retail communication.
Common mistakes
- Calling interactive posts correspondence. Interactive posts are retail communications excepted from pre-approval and filing. A static profile page still needs pre-approval.
- Having established firms file everything. They file only listed types, most of them after use (see the filing decision box).
- Citing the SEC adviser rule. The SEC's investment adviser marketing rule, Rule 206(4)-1, does not govern broker-dealer testimonials. FINRA Rule 2210(d)(6) does, with its $100 paid-testimonial trigger.
Bottom line
- More than 25 retail investors in any 30 calendar days makes a piece a retail communication, and 25 or fewer makes it correspondence.
- An institutional communication goes only to institutional investors and loses that status if you have reason to believe it will reach a retail investor.
- Institutional investors include banks, insurers, registered investment companies, registered advisers, persons with at least $50 million in assets, governments, plans with at least 100 participants, and FINRA members and their registered persons.
- A principal approves each retail communication before use or filing, whichever comes first.
Exam shortcut
Count first: add up a written piece's retail recipients across any 30 days. More than 25 means pre-approval unless an exception applies, and 25 or fewer means no pre-approval. If the stem says "unscripted," it describes a public appearance. Look for content standards and disclosure, never pre-approval. A talk read from a script is different, because the script is a communication. Then classify any slides by audience.
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Learning objectives
- A1
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