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4.4 Correspondence

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Securities Industry Essentials SIE

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1 Introduction

About the SIE Exam How to Use This Course

2 Chapter 1: Knowledge of Capital Markets

1.1 Regulatory Bodies 1.2 State Regulation 1.3 Market Participants 1.4 Types of Markets 1.5 The Exchanges 1.6 OTC Markets 1.7 Economic Policies 1.8 Interest Rates 1.9 Business Cycles 1.10 International Economics

3 Chapter 2: Understanding Products and Their Risks

2.1 Common Stock Basics 2.2 Corporate Actions 2.3 Preferred Stock 2.4 ADRs 2.5 Bond Basics 2.6 Yields 2.7 U.S. Treasury Securities 2.8 Corporate Bonds 2.9 Municipal Bonds 2.10 Money Market Instruments 2.11 Options Basics 2.12 Hedging Strategies 2.13 Mutual Funds 101 2.14 Mutual Fund Fees 2.15 ETFs 2.16 UITs & REITs 2.17 DPPs 2.18 Systematic Risk 2.19 Non-Systematic Risk 2.20 Mitigation Strategies

4 Chapter 3: Trading, Customer Accounts and Prohibited Activities

3.1 Order Types 3.2 Trade Settlement 3.3 Quoting 3.4 Account Types 3.5 Account Registration 3.6 Retirement Plans 3.7 Education Savings 3.8 AML Rules 3.9 Market Manipulation 3.10 Insider Trading 3.11 Customer Protection

5 Chapter 4: Overview of Regulatory Framework

4.1 Registration 4.2 Continuing Education 4.3 Employee Conduct 4.4 Correspondence

4.4 Correspondence

Key Takeaways Explain This Topic AI

FINRA Rule 2210 defines three communication categories: Correspondence (≤25 retail investors in 30 days), Retail Communications (>25 retail investors), and Institutional Communications

Retail communications generally require principal pre-approval and must be filed with FINRA in certain cases (new firms must file all retail communications in first year)

All communications must be fair, balanced, not misleading, and present risks alongside benefits with required disclosures

Communications records must be retained for 3 years with 2 years easily accessible, while complaints must be kept for 4 years

Social media content is classified as retail communication if public and static, or correspondence if interactive/direct messages, subject to firm supervision

Last updated: January 2026

Communications with the Public

FINRA Rule 2210 governs how broker-dealers communicate with the public. Understanding the three categories of communications and their requirements is essential for compliance.

Three Categories of Communications

FINRA Rule 2210 defines three types of written communications:

  • Category Definition
  • Correspondence ≤25 retail investors in 30 days
  • Retail Communications >25 retail investors in 30 days
  • Institutional Communications Only to institutional investors
  • Correspondence

Correspondence is written communication to 25 or fewer retail investors within a 30-day period.

  • Examples of Correspondence
  • Personal emails to individual clients
  • Individual client letters
  • Small group communications
  • One-on-one messages
  • Requirements for Correspondence
  • Requirement Detail
  • Principal Pre-approval Not required
  • FINRA Filing Not required
  • Supervision Subject to firm review policies
  • Recordkeeping Must be retained per rules
  • Supervision of Correspondence

While pre-approval is not required, firms must:

  • Establish written supervisory procedures
  • Review a sample of correspondence
  • Ensure compliance with content standards
  • Train representatives on requirements

Key Point: Correspondence has the lightest regulatory requirements because it reaches the fewest people.

Retail Communications

Retail communications reach more than 25 retail investors within a 30-day period.

Examples of Retail Communications

  • Type Examples
  • Advertising TV, radio, print ads, billboards
  • Sales Literature Brochures, research reports, newsletters
  • Website Content Public-facing web pages
  • Social Media Public posts, advertisements
  • Requirements for Retail Communications
  • Requirement Detail
  • Principal Pre-approval Generally required
  • FINRA Filing Required for certain types
  • Content Standards Must be fair and balanced
  • Recordkeeping Retain for 3 years
  • FINRA Filing Requirements

Communication Type Filing Required?

  • New firm (first year) Must file all retail communications
  • Options communications Pre-file 10 days before use
  • Investment company rankings Pre-file 10 days before use
  • CMOs and structured products File within 10 days of first use
  • Content Standards for Retail Communications

All retail communications must:

  • Be fair and balanced
  • Provide sound basis for evaluation
  • Not contain exaggerated claims
  • Include required disclosures
  • Present risks alongside benefits
  • Institutional Communications

Institutional communications are distributed only to institutional investors.

Institutional Investors Include

  • Type Examples
  • Financial Institutions Banks, insurance companies
  • Registered Entities Broker-dealers, investment advisers
  • Large Entities Organizations with $50M+ in assets
  • Qualified Purchasers As defined under securities laws
  • Requirements for Institutional Communications
  • Requirement Detail
  • Principal Pre-approval Not required
  • FINRA Filing Not required
  • Content Standards Must not be misleading
  • Recordkeeping Must be retained

Why Lighter Requirements?

Institutional investors are presumed to be:

  • More sophisticated
  • Better able to evaluate information
  • Less in need of regulatory protection
  • Capable of asking clarifying questions

Important: If institutional communication becomes accessible to retail investors, it must be reclassified and treated as retail communication.

  • Content Standards (All Communications)
  • General Standards

All communications must:

  • Standard Requirement
  • Fair and Balanced Present risks and benefits equally
  • Not Misleading No false or exaggerated claims
  • Sound Basis Based on accurate information
  • Clear Understandable by target audience
  • Prohibited Content
  • Prohibition Example
  • Guarantees "Guaranteed 10% return"
  • Exaggeration "Best performing fund ever"
  • Predictions "Stock will definitely rise"
  • Misleading Omissions Stating benefits without risks
  • Required Disclosures

Depending on content, may need to disclose:

  • Past performance is not indicative of future results
  • Investment risks
  • Conflicts of interest
  • Source of information
  • Date of publication
  • Social Media

Social media communications are subject to FINRA rules.

Classification of Social Media

  • Type Classification
  • Static content Retail communication (if public)
  • Interactive/real-time May be correspondence
  • Direct messages Correspondence
  • Social Media Considerations
  • Issue Guidance
  • Third-party posts Firm liable if adopted/entangled
  • Testimonials Must comply with SEC rules
  • Hyperlinks May adopt linked content
  • Personal accounts Subject to firm supervision
  • Recordkeeping Requirements
  • Retention Periods
  • Record Type Retention
  • Communications 3 years (2 years easily accessible)
  • Complaints 4 years
  • FINRA correspondence Varies by type
  • What Must Be Retained
  • All retail communications
  • Samples of correspondence (per firm policy)
  • Institutional communications
  • Approval records
  • Filing confirmations
  • Supervision and Approval
  • Principal Responsibilities
  • Function Principal Role
  • Pre-approval Review before use (retail)
  • Training Ensure reps understand rules
  • Monitoring Review samples of correspondence
  • Enforcement Address violations
  • Supervisory Procedures

Firms must have written procedures for:

  • Reviewing communications before use
  • Sampling correspondence for review
  • Filing required communications
  • Training representatives
  • Addressing violations
  • Key Takeaways
  • Three categories: Correspondence, Retail, Institutional
  • Correspondence: ≤25 retail investors, lightest requirements
  • Retail Communications: >25 retail investors, filing/approval required
  • Institutional: Only to institutions, lighter requirements
  • All must be fair, balanced, and not misleading
  • Social media is subject to communication rules
  • Firms must retain records for 3 years
  • Reclassification required if audience changes