Quick Answer
Members must retain retail and institutional communications for at least three years, with the first two years easily accessible. The record must include the communication, its use dates, the approving principal (or preparer if unapproved), the source of any statistical illustration, and, for retail pieces only, filing details and any performance ranking copy. Correspondence follows the same standard.
Recordkeeping is the paper trail behind every category, approval decision, and filing covered so far in this unit. A firm's records have to prove, after the fact, that it actually did what the earlier sections require.
How Long Must Communications Be Retained?
Members must retain retail and institutional communications for the federal securities recordkeeping standard: not less than three years, with the first two years in an easily accessible place.
- Correspondence is retained under that same three-year standard, which FINRA's correspondence retention rule fixes rather than the firm. The retained record must also make the names of the person who prepared outgoing correspondence and the person who reviewed it ascertainable, and the record must be available to FINRA on request.
Exam Tip: Gotchas
- "Easily accessible" only applies to the first two of the three years. Year three can be archived somewhere less immediately retrievable.
- The retention clock and the recordkeeping standard apply the same way to correspondence as to retail and institutional communications, even though correspondence is excluded from Department filing.
What Must the Retained Record Include?
A complete record for a retail or institutional communication has to include:
- A copy of the communication and the dates of its first (and last, if applicable) use.
- The name of the approving principal and the date approval was given, or, if the piece was not approved before first use, the name of the person who prepared or distributed it.
- The source of any statistical table, chart, graph, or other illustration used in the communication.
- For a retail communication only, two further items where they apply: the name of the member that filed it and the Department's review letter, in the case where principal approval was not required because the firm relied on that other member's filing; and a copy of any performance ranking or comparison of a registered investment company the piece uses. Neither item reaches an institutional communication.
Exam Tip: Gotchas
- The record does not always name an approving principal. When a retail or institutional communication was not approved before first use, the record instead names whoever prepared or distributed it.
- Sourcing a chart or table isn't optional. The record has to trace any statistical illustration back to where it came from, separate from the approval and filing information.
What Should You Check on Exam Day?
- Apply the three-year, first-two-years-accessible standard to retail communications, institutional communications, and correspondence alike.
- Distinguish the two possible entries for the "who's on record" field: the approving principal's name and approval date, or the preparer's or distributor's name if no principal approved it before use.
- Confirm a scenario about sourcing a chart or performance ranking is testing the recordkeeping requirement, not the content standards from earlier in this unit.