4.2 Content Standards, Investment Company Advertising, and Professional Designations

Investment Company and Variable Contracts Products Principal Series 26

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1 Chapter 1: Registration of the Broker-Dealer and Its Associated Persons

1.1 Broker-Dealer Registration, FINRA Membership, and Firm Filings 1.2 Individual Registration: Forms U4 and U5, Registration Categories, and Exempt Persons 1.3 Pre-Hire Screening, Fingerprinting, and Statutory Disqualification 1.4 Heightened Supervision, Interim Plans, and the Taping Rule 1.5 Broker-Dealers, Investment Advisers, Dual Registrants, and Unregistered Entities

2 Chapter 2: Training, Continuing Education, and Product Knowledge

2.1 Continuing Education (Rule 1240), the Maintaining Qualifications Program, and the Annual Compliance Meeting 2.2 The Investment Company Act of 1940: Classifications, Registration, and Fund Governance 2.3 Mutual Fund Pricing, Redemption, Exchanges, Sales Charges, and Share Classes 2.4 Variable Annuities and Variable Life Insurance: Structure, Charges, and Rule 2320 2.5 Closed-End and Interval Funds, UITs, Money Market Funds, 529 Plans, and Investment Risks

3 Chapter 3: Supervisory System, Conduct Standards, Insider Trading, and Discipline

3.1 The Supervisory System, Written Supervisory Procedures, and Standards of Conduct 3.2 Insider Trading, Information Barriers, and Personal Trading Supervision 3.3 FINRA Investigations, Disciplinary Proceedings, Sanctions, and Exemptions

4 Chapter 4: Communications with the Public

4.1 Communications Categories, Principal Approval, Filing, and Recordkeeping (Rule 2210) 4.2 Content Standards, Investment Company Advertising, and Professional Designations 4.3 Variable Contract Communications, Fund Rankings, Bond Fund Volatility Ratings, and Investment Analysis Tools 4.4 Correspondence and Internal Communications, Social Media, Public Appearances, and Telemarketing

5 Chapter 5: Recommendations, Customer Accounts, and Product Sales Supervision

5.1 Regulation Best Interest, Conflicts, and Form CRS 5.2 Know Your Customer, FINRA Suitability, and Institutional Accounts 5.3 New Accounts, Customer Authority, Discretion, and Order Handling 5.4 Mutual Fund Breakpoints, Share Classes, and Switching Supervision 5.5 Deferred Variable Annuities and the Seven-Business-Day Principal Review 5.6 Prospectuses, Summary Prospectuses, SAIs, and Ongoing Disclosures

6 Chapter 6: Compensation, Outside Activities, and Personal Conduct

6.1 Cash Compensation, Distribution Arrangements, and Conflicts 6.2 Gifts, Gratuities, and Business Entertainment (Rule 3220) 6.3 Training Meetings, Sales Contests, and Non-Cash Compensation 6.4 Referral Payments, Bank Networking, and Unregistered Persons 6.5 Outside Business Activities, Private Securities Transactions, and Rule 3290 Transition 6.6 Outside Accounts, Borrowing and Lending, Account Sharing, and Guarantees

7 Chapter 7: Customer Account Operations, Transfers, and Privacy

7.1 Account Records, Trusted Contacts, Confirmations, and Statements 7.2 Cash Accounts, T+1 Settlement, Regulation T, Extensions, and Freeriding 7.3 ACATS Transfers, Transfer-on-Death Accounts, and Account Changes 7.4 Regulation S-P, Incident Response, Service Providers, and Identity Theft

8 Chapter 8: Anti-Money Laundering, Customer Identification, and Sanctions

8.1 AML Program, Independent Testing, Training, and Governance 8.2 Customer Identification, Due Diligence, and Beneficial Ownership 8.3 SARs, CTRs, OFAC, Information Sharing, and AML Red Flags

9 Chapter 9: Supervisory Controls, Business Continuity, and Regulatory Reporting

9.1 Supervisory Controls, Annual Testing, and CEO Certification 9.2 Business Continuity, Systems Resilience, Cybersecurity, and Vendors 9.3 Rule 4530, FOCUS and Annual Reports, and Customer-Asset Events

10 Chapter 10: Office Classifications, Inspections, and Records

10.1 OSJs, Branches, RSLs, and Inspection Cycles 10.2 Inspection Reports, Independent Review, Signage, and Office Files 10.3 Broker-Dealer Books and Records, Electronic Storage, and Correspondence

11 Chapter 11: Complaints, Arbitration, Mediation, and Expungement

11.1 Customer Complaints, Investigation, Retention, and Reporting 11.2 Predispute Agreements, Arbitration Codes, Eligibility, Panels, and Awards 11.3 Mediation and Customer-Dispute Expungement

12 Chapter 12: Financial Responsibility, Membership Changes, and Investor Protection

12.1 Net Capital, Minimum Tiers, Haircuts, and Early Warning 12.2 Customer Protection, Possession or Control, Reserve Formula, and Exemptions 12.3 New-Product Review and Continuing Membership Applications 12.4 SIPC, Fidelity Bonds, Proxy Materials, and Financial Reports

4.2 Content Standards, Investment Company Advertising, and Professional Designations

Key Takeaways Explain This Topic AI

Rule 2210(d)(1) requires communications to be fair and balanced and prohibits predicting or projecting performance, implying that past performance will recur, or making exaggerated or promissory claims.

A fund advertisement with performance must show standardized 1-, 5- and 10-year total returns current to the most recent calendar quarter, and must give a toll-free number or website for month-end returns unless month-end data is included.

Retail communications and correspondence presenting non-money-market fund performance must also show the maximum sales charge and the gross total annual operating expense ratio from the current prospectus, in a prominent text box in print ads.

An illustration comparing tax-deferred and taxable investing may not assume a gross return above 10% per year and must use actual federal income tax rates.

Each member website must include a readily apparent reference and hyperlink to BrokerCheck on its initial retail page and on pages profiling registered persons who deal with retail investors.

Last updated: September 2026

General Content Standards (Rule 2210(d)(1))

Every communication, whether retail, correspondence or institutional, must:

be based on principles of fair dealing and good faith , be fair and balanced , and provide a sound basis for evaluating the facts;

• not omit any material fact or qualification if the omission would make the communication misleading;
• contain no false, exaggerated, unwarranted, promissory or misleading statement or claim;
• use legends or footnotes only if that placement does not inhibit understanding;
• give balanced treatment of risks and potential benefits and reflect the uncertainty of returns and yields;
• consider the nature of the audience ; and

not predict or project performance , imply that past performance will recur , or make an exaggerated or unwarranted claim, opinion or forecast.

The projection ban allows three exceptions: hypothetical illustrations of mathematical principles that do not project an investment's performance, investment analysis tools that comply with Rule 2214 (Section 4.3), and price targets in research reports that meet specified conditions.

Specific Content Rules

Rule 2210(d) provision Requirement

(2) Comparisons Retail comparisons of investments or services must disclose all material differences, including objectives, costs, liquidity, safety, guarantees or insurance, fluctuation of principal or return, and tax features

(3) Member name Retail communications and correspondence must prominently show the member's name and reflect any relationship with non-members named, such as a DBA or an affiliated insurance agency

(4) Tax considerations Income must not be called tax-free when taxes are only deferred. Municipal fund income subject to state or local tax must say so. A tax-deferred versus taxable illustration must use identical amounts and returns of no more than 10% per year , use actual federal rates, disclose that the rate is not guaranteed and that withdrawals are taxed as ordinary income, and address penalties

(5) Fees and standardized performance Retail communications and correspondence showing non-money-market fund performance must include the standardized performance required by Rule 482 and Rule 34b-1 , the maximum sales charge , and the total annual fund operating expense ratio gross of waivers from the current prospectus. Print ads must put this in a prominent text box

(6) Testimonials A testimonial about a technical aspect of investing requires a person with the knowledge to give it. Testimonials about advice or performance must disclose that they may not be representative and do not guarantee future results, and that the testimonial was paid if more than $100 was paid

(7) Recommendations Recommendations in retail communications need a reasonable basis and specified disclosures. For communications recommending only registered investment companies or variable insurance products , the market-maker and financial-interest disclosures in (d)(7)(A) and the limits on citing past recommendations in (d)(7)(C) do not apply, but the reasonable-basis requirement does

(8) BrokerCheck Each member website must include a readily apparent reference and hyperlink to BrokerCheck on the initial page meant for retail investors and on pages profiling registered persons who deal with retail investors

(9) Prospectuses SEC-filed prospectuses are not subject to Rule 2210(d), but a Rule 482 advertising prospectus is

SEC Rules for Investment Company Advertising

Securities Act Rule 482 treats a fund advertisement as a prospectus under Section 10(b) of the Securities Act, which lets it be used before or alongside the statutory prospectus. It must:

advise investors to consider the fund's investment objectives, risks, and charges and expenses carefully before investing , explain that the prospectus and summary prospectus contain this and other information, say where to get them, and urge investors to read them carefully;

if it shows performance, present average annual total returns for 1, 5 and 10 years (or the life of the fund), current to the most recent calendar quarter before submission for publication, all with equal prominence;

include a legend that the data represents past performance , which does not guarantee future results; that investment return and principal value will fluctuate, so shares may be worth more or less than their cost; and that current performance may be lower or higher; and

give a toll-free number or website for performance current to the most recent month-end , unless the ad already shows total returns current to the most recent month ended seven business days before use.

Money market fund ads follow separate yield rules. Government and retail money market funds may omit the statement about principal fluctuation.

Investment Company Act Rule 34b-1 says fund sales literature that must be filed under Section 24(b) is misleading unless, when it presents performance, it includes the same standardized information and legends Rule 482 requires.

Securities Act Rule 156 lists factors that make investment company sales literature materially misleading under Section 17(a) and Rule 10b-5:

• statements misleading in context or for lack of qualifications;
• portrayals of past performance that imply results not justified or that past gains will be repeated;
• representations about future performance or security of capital ;
• benefits presented without equal prominence for risks ;
• exaggerated claims about management skill or the effects of government supervision;
• unwarranted or incompletely explained comparisons to other investments or indexes; and

incomplete portrayals of fees and expenses .

Rule 135a (generic advertising) lets a sponsor explain investment companies generally, describe generic fund types such as growth, income, bond, balanced or variable annuity, and invite inquiries without the communication being treated as an offer of a specific fund. The ad must name a registered broker-dealer or other sponsor and its address. If it solicits inquiries to be answered with prospectuses, it must state how many funds are involved and whether the sponsor is their principal underwriter or adviser.

Section 24(b) and Rule 24b-3. Fund sales literature must be filed with the SEC, but Rule 24b-3 deems it filed once it is filed with FINRA. That is why investment company pieces excluded from FINRA filing are still treated as filed for Section 24(b) purposes.

Professional Designations

The outline lists "appropriate use of professional designations." A designation in a communication or on a business card is part of the content, so it must not be false, exaggerated or misleading under Rule 2210(d)(1). Many states have adopted rules restricting senior-specific designations that imply special expertise in advising older investors unless the credential meets accreditation standards. Firms should keep a list of approved designations. For each, the principal should check:

• whether the issuer requires meaningful coursework or an exam;
• whether it requires continuing education;
• whether the issuer has a public way to verify holders and a disciplinary process; and

whether the representative actually holds the designation and it is current.

FINRA's website maintains a reference database of professional designations to help with this review. A designation that implies regulatory approval, such as a title suggesting FINRA or SEC certification, is misleading.