FINRA Communication and Documentation 4

Question 1

Under FINRA Rule 2210, which of the following is NOT a general content standard applicable to all member communications?

Accepted Answer

Communications must guarantee investment returns when supported by data

Answer

Communications must be based on principles of fair dealing

Answer

Communications must provide a sound basis for evaluating facts

Answer

Communications must not omit material information that makes the communication misleading

Question 2

A firm's communication highlights only the best-performing years of a mutual fund's history. This practice most likely violates which principle?

Accepted Answer

The requirement for fair and balanced presentation

Answer

The prohibition on institutional communications

Answer

The requirement to file communications with FINRA

Answer

The prohibition on testimonials

Question 3

When a registered representative uses pre-approved retail communication templates but modifies them, FINRA generally requires:

Accepted Answer

Re-approval of the modified communication by a principal

Answer

No additional review since the base template was already approved

Answer

Filing the modified version with FINRA within 10 business days

Answer

Disclosure to customers that the communication was modified

Question 4

Under FINRA rules, which entity has primary responsibility for reviewing and approving a registered representative's retail communications?

Accepted Answer

A registered principal at the member firm

Answer

FINRA's Advertising Regulation Department

Answer

The SEC's Division of Enforcement

Answer

The state securities regulator

Question 5

A firm wants to use a communication that includes a ranking or award from a third party. Under FINRA Rule 2210, this is permissible if:

Accepted Answer

The ranking criteria are disclosed and the communication is not misleading

Answer

The ranking comes from any recognized financial publication

Answer

FINRA pre-approves the specific ranking source

Answer

The award was received within the past five years

Question 6

FINRA Rule 2210 prohibits communications that predict or project investment performance EXCEPT:

Accepted Answer

Illustrations of hypothetical investment growth using required disclosures

Answer

Projections based on historical returns of less than one year

Answer

Any forward-looking statements about specific securities

Answer

Predictions endorsed by a FINRA-registered analyst

Question 7

A firm's retail communication compares its mutual fund to a benchmark index. FINRA requires that the comparison:

Accepted Answer

Disclose the material differences between the fund and the benchmark

Answer

Use only FINRA-designated benchmark indices

Answer

Show outperformance for at least three of the past five years

Answer

Include written FINRA approval of the benchmark selection