FINRA’s New Communications Regime Takes Effect in February
FINRA’s revamped rules governing communications with the public, which have now been approved by the SEC, take effect on February 4, 2013. The most significant change reduces the categories of communications to three – institutional communications, retail communications, and correspondence – from the previous six. Retail communications, which generally include the old “advertisements” and “sales literature,” include any written communication distributed to more than 25 retail customers or prospects. FINRA notes that it has eliminated the distinction between customers and prospects. With respect to institutional investors, FINRA will maintain the “reason to believe” standard but imposes a duty to take action if a firm becomes aware that an institution is distributing materials to retail investors.