Quick Answer
Written and electronic messages sort by audience: retail (more than 25 retail investors in 30 days), institutional (institutional investors only), and correspondence (25 or fewer retail investors). Retail communications need principal pre-approval; some also get filed with the Financial Industry Regulatory Authority (FINRA). Products like options, municipals, variable contracts, and research carry their own disclosure rules.
The whole unit on one sheet: classify by audience, know who approves and files, and nail the product-specific disclosure lines the exam loves.
What Are the Communication Categories?
- Retail communication: available to more than 25 retail investors in any rolling 30 calendar-day period. Needs principal pre-approval before the earlier of use or filing.
- Institutional communication: available only to institutional investors. No pre-approval, but written review procedures required.
- Correspondence: 25 or fewer retail investors in 30 days. No pre-approval; supervise and review.
- Public appearance: a separate bucket for unscripted speaking (seminars, radio, television). Supervised, not pre-approved.
Which One-Liners Win Points?
- Institutional investor = a bank, insurance company, registered investment company, registered investment adviser, government entity, FINRA member, or anyone with $50 million in total assets. A high-net-worth individual with $50 million qualifies.
- Scripted seminar to more than 25 retail investors = retail communication (pre-approval). Unscripted talking = public appearance.
- At a seminar, the spoken word may be a public appearance, but the handouts and slides are retail communications if more than 25 retail investors attend.
- Principal pre-approval and FINRA filing are two different obligations. Every retail piece needs pre-approval; only some also get filed.
- Content standards (fair, balanced, good faith, no performance predictions) apply to all categories, including public appearances.
- A bond fund volatility rating is never a "risk" rating.
- Options Disclosure Document (ODD) delivery is triggered by account approval for options trading, not the first trade; a hyperlink counts as delivery.
Which Numbers Matter Most?
| Item | Value |
|---|---|
| Retail vs. correspondence line | more than 25 retail investors / 30 calendar days |
| Institutional investor asset threshold | $50 million total assets |
| New member firm filing | 10 business days BEFORE first use |
| Established member filing | within 10 business days of first use |
| Pre-ODD options communication filing | 10 calendar days before use |
| Full prospectus after investor request | 3 business days |
| Standardized fund performance periods | 1, 5, and 10 years |
| IPO research quiet period | 10 days (syndicate managers and members) |
| Secondary offering quiet period | 3 days (managers and co-managers); none for other members |
Which Gotchas Trip Students Up?
- The 25 count is a rolling 30-day total, not per mailing: an email to 26 retail customers over 30 days is a retail communication even if sent one at a time. Internal communications are excluded from all three categories.
- Institutional communications need written review procedures, not pre-approval. Know "pre-approval required" (retail) versus "review procedures required" (institutional).
- New members file BEFORE use (10 business days ahead); established members file AFTER use (within 10 business days). Pre-ODD options filing is 10 calendar days, easy to confuse with the business-day rule.
- The mutual-fund-advertising rule is not a safe harbor from anti-fraud liability; performance must use standardized 1, 5, and 10-year periods (no cherry-picked windows).
- Variable annuity guarantees depend on the insurer's claims-paying ability, not the separate account. Never imply the product is short-term or liquid, and never overemphasize a guarantee.
- Full name "Collateralized Mortgage Obligation" must appear in CMO retail communications and correspondence; "CMO" alone is not enough. Educational material must be offered (not delivered) to non-institutional investors.
- Pre-ODD options materials cannot name specific securities, recommend, or show performance. Independent third-party research on a website or upon request escapes only the conflict-disclosure duty, never labeling, review, or approval. Selective distribution of research is prohibited: all entitled clients get it at substantially the same time.
One-Breath Recap
Classify by audience first: more than 25 retail investors is a retail communication, institutional-only is institutional, 25 or fewer is correspondence, and unscripted talk is a public appearance. Pre-approve every retail piece and file some with FINRA, keep everything fair and balanced, and layer on the product-specific disclosures for options, municipals, variable contracts, and research. Nail the numbers and the classification and this unit answers itself.
Need more than the recap? Read the full Public Communications and Advertising unit.