FINRA Rule 2210 - Communications with the Public
FINRA Rule 2210 is the foundation for how broker-dealers communicate with investors. It classifies every written communication into one of three categories, sets universal content standards, and establishes different approval and filing requirements for each category.
The Three Categories of Communications
FINRA Rule 2210 classifies all broker-dealer communications based on audience size and type:
| Category | Definition | Threshold |
|---|---|---|
| Retail Communication | Any written (including electronic) communication distributed to more than 25 retail investors within any 30 calendar-day period | > 25 retail investors / 30 days |
| Correspondence | Any written (including electronic) communication distributed to 25 or fewer retail investors within any 30 calendar-day period | 1-25 retail investors / 30 days |
| Institutional Communication | Any written (including electronic) communication distributed only to institutional investors | Institutional investors only |
Key Definitions
- A retail investor is any person who is not an institutional investor
- An institutional investor includes:
- Banks, savings institutions, insurance companies
- Registered investment companies and registered investment advisers
- Any entity with total assets of at least $50 million
- Governmental entities
- Employee benefit plans with at least 100 participants
- FINRA member firms
- Persons acting solely on behalf of any such institutional investor
The 25-Person Threshold
The threshold is measured per 30-calendar-day period. This means the same communication sent to 10 people in week one and 20 different people in week three (within 30 days) counts as a retail communication because the total (30) exceeds 25.
Exam Tip: Gotchas
The distinction between "correspondence" and "retail communication" is purely numerical - 25 or fewer = correspondence, more than 25 = retail communication. Both go to retail investors. The exam tests whether you can classify correctly based on the number of retail investors who receive the communication within a 30-day window. Also note: the institutional investor asset threshold is $50 million, not $100 million - a common wrong answer on the exam.
Content Standards (FINRA Rule 2210(d))
All three categories of communications must comply with the same content standards:
- Must be fair and balanced and provide a sound basis for evaluating facts
- Must be based on principles of fair dealing and good faith
- Must not contain any false, exaggerated, unwarranted, promissory, or misleading statements or claims
- Must not omit any material fact or qualification that would cause the communication to be misleading
- Must clearly identify the member firm (or the relationship of the person to the member)
- If recommending a security, must disclose whether the member or associated person has a financial interest in the security
- Must not predict or project performance, imply that past results will recur, or make exaggerated or unwarranted claims
- Risk and potential benefits must be presented with equal prominence - you cannot emphasize rewards while burying or omitting risks
| Permitted | Prohibited |
|---|---|
| Historical performance with appropriate disclaimers | Predicting or projecting future performance |
| Balanced discussion of risks and benefits | Emphasizing benefits while omitting or minimizing risks |
| Factual statements about securities | Exaggerated, unwarranted, or promissory claims |
| Clearly identified testimonials with disclosures | Undisclosed paid testimonials |
Exam Tip: Gotchas
Content standards apply to all three categories - retail communications, institutional communications, and correspondence. A common exam trap is suggesting that content standards only apply to retail communications. They apply universally.
Approval and Review Requirements
The level of supervisory review differs by communication category:
| Category | Principal Approval Required? | Details |
|---|---|---|
| Retail Communication | Yes - prior approval by a registered principal before first use or filing | Must be approved before the communication is used or filed with FINRA |
| Correspondence | No prior approval - subject to supervisory review under FINRA Rule 3110 | Firm must have written supervisory procedures; may use risk-based sampling |
| Institutional Communication | No prior approval - firm must have written compliance procedures | Staff education, surveillance, and review procedures required |
Key point: Even though correspondence and institutional communications do not require prior principal approval, the firm must still supervise them through written procedures.
Exam Tip: Gotchas
"Principal approval before use" applies only to retail communications. Correspondence requires supervision (review procedures) but not prior principal approval. Institutional communications require written compliance procedures but also not prior principal approval. The exam loves testing this distinction.
Filing Requirements with FINRA
Filing requirements apply primarily to retail communications and vary based on the firm's membership status and product type:
| Filing Requirement | When to File |
|---|---|
| New member firms (first year of FINRA membership) | Must file retail communications used in public media at least 10 business days before first use (pre-use) |
| Established members - specific products (investment companies, DPPs, CMOs, structured products) | Must file within 10 business days after first use (post-use) |
| Pre-use filing required | Communications about security futures; custom investment company performance rankings |
Exempt from FINRA Filing
- Prospectuses filed with the SEC
- Press releases
- Reprints of previously filed materials
- Correspondence
- Institutional communications
- Research reports meeting certain criteria
FINRA's Advertising Regulation Department reviews filed communications and may require modifications or cessation of use. FINRA may also extend the new-member pre-use filing requirement beyond one year if warranted.
Exam Tip: Gotchas
New members must file 10 business days before use (pre-use). Established members generally file within 10 business days after use (post-use). The exam tests this timing distinction.