Public communications

When a firm communicates with the public, FINRA classifies each communication and regulates it based on that category. Firms must supervise their public communications and keep records of them. There are three main categories of public communications: correspondence, retail communications, and institutional communications.

Any written or electronic communication sent to 25 or fewer retail investors within a 30-day period is considered correspondence. This usually includes personal letters, emails, or messages sent to small groups of investors. Correspondence is generally lower on FINRA’s priority list. FINRA may still request to see what’s being sent (see retail communications below), but firms do not have to file correspondence with FINRA. Correspondence also does not require internal pre-approval by a principal (supervisor). Even so, the firm must actively supervise correspondence, and it is always subject to FINRA review.

Any written or electronic communication sent to more than 25 retail investors within a 30-day period is considered a retail communication. FINRA pays closer attention to these communications because they reach a larger audience. Examples include commercials, newspaper ads, and billboards. To help regulate and enforce its rules, FINRA requires firms to file copies of retail communications. In addition, a firm principal (supervisor) must pre-approve these communications before they are distributed.

Institutional communications are written or electronic communications sent to institutions. Because institutions are generally considered capable of evaluating information and identifying potential fraud, FINRA does not require firms to file institutional communications or have them pre-approved by principals. Like correspondence, institutional communications must still be supervised by the firm and are always subject to FINRA review. Institutions include banks, broker-dealers, underwriters, and insurance companies.