Filing Communications with FINRA

If a BD is preparing an advertisement investment opportunity for more than 25 institutional investors. Does that need to be filed? I see that the filing requirements do not apply to institutional communications and correspondence, but if its about a specific security or a offering an opportunity will it need to filed with FINRA? If so, is it after having it approved by principal?


Great question @Married_moccasin_cra - communication rules can be a bit confusing.

Generally speaking, communications only received by institutions are considered institutional communications, no matter how many institutions are involved. As it is covered in Achievable’s SIE chapter on Public Communications, institutional communications are not required to be pre-approved by a principal or filed with FINRA, although they are subject to regulatory review. This is the standard applied whether there’s one or a thousand institutions involved.

FINRA’s communication rules are initially categorized based on the audience, not the contents of the communication. The reason for this relates to the sophistication (knowledge) of the audience. Institutions are generally resource-rich and represented by highly educated and intelligent individuals. Therefore, FINRA does not impose many regulations related to institutional communications. Keep in mind the ultimate point of regulating anything in the securities markets is to protect investors. Institutions are savvy and generally don’t need much protection.

Conversely, many retail investors are unsophisticated and can be taken advantage of. That’s why there are so many rules related to retail communications as they are impacting large numbers of retail investors.

but if its about a specific security or a offering an opportunity will it need to filed with FINRA?

FINRA maintains many security/opportunity-specific communication rules for retail communications. For example, retail communications related to investment company products that include a performance ranking must be filed with FINRA 10 business days prior to use. Other retail communications must be filed with FINRA 10 business days after initial use, while some others aren’t required to be filed at all. Good news - nitty gritty public communications rules (like this one) are unlikely to be tested on the SIE exam. However, you will likely encounter this content if your next exam is the Series 6 or Series 7.

There are no notable security/opportunity-specific communication rules related to institutional communications.