Correspondence

Correspondence, under FINRA Rule 2210, is best defined as a written communication distributed to...

1. A.Institutional investors onlyThat describes an institutional communication.
2. B.More than 25 retail investors within a 30-day periodThat threshold defines a retail communication, not correspondence.
3. C.The general public through mass mediaA mass-media message reaching the public is a retail communication.
4. D.25 or fewer retail investors within a 30-day periodCorrect — that is the definition of correspondence.

Why: Correspondence reaches 25 or fewer retail investors within a 30-calendar-day period.

Fenwick Securities must preserve copies of the retail communications, correspondence and institutional communications it uses, along with the names of the principals who approved them. Under FINRA and SEC recordkeeping rules, the retention period for these communications is:

1. A.The life of the firm plus three years.Wrong. Lifetime retention applies to organizational documents such as articles of incorporation, partnership agreements and minute books.
2. B.Three years from the date of last use, with the records readily accessible for the first two years.Correct. Three years total, first two in an easily accessible place, together with the approval and source records.
3. C.One year from the date of last use.Wrong. One year is too short for any category of broker-dealer communications records.
4. D.Six years from the date of last use.Wrong. Six years applies to certain blotters and customer account records, not to communications with the public.

Why: Communications with the public are retained for three years from the date of last use, and for the first two of those years they must be kept in an easily accessible place. The record must also show the name of the person who prepared the communication, the name of the principal who approved it and the date of approval (or, where the piece was filed, the filing details), plus the source of any statistical information used. Three years is the standard period for most broker-dealer records; a few categories - notably the firm's articles, partnership agreements and minute books - run for the life of the firm.

A registered representative has business cards and letterhead printed showing her name, her firm's name, her title and her contact details, and hands them out at industry networking events attended largely by prospective retail clients. Under FINRA Rule 2210, these materials are:

1. A.Institutional communications, since networking events are attended mainly by business professionals.Wrong. An institutional communication goes exclusively to institutional investors. Prospective retail clients are retail investors regardless of the venue.
2. B.Retail communications, because they are made available to more than 25 retail investors within a 30 calendar day period.Correct. Reach to more than 25 retail investors in 30 days is what makes a communication retail under Rule 2210.
3. C.Correspondence, because each card is handed to a single individual at a time.Wrong. The classification counts total retail recipients over 30 days, not how many receive the item at once. Correspondence is 25 or fewer.
4. D.Outside Rule 2210 entirely, because a business card contains no investment recommendation.Wrong. Rule 2210 classifies by audience, not by content. The absence of a recommendation may excuse pre-use APPROVAL, but the card is still a retail communication.

Why: Rule 2210 classifies communications by AUDIENCE and reach, not by format or by whether a recommendation appears. Anything made available to more than 25 retail investors within any 30 calendar day period is a RETAIL COMMUNICATION, and business cards and letterhead handed out broadly fall squarely inside that definition. Twenty-five or fewer retail investors in 30 days would make the item correspondence instead; distribution exclusively to institutional investors would make it an institutional communication.

Under FINRA Rule 2210, a communication distributed to 80 retail investors within a 30-day period is classified as:

1. A.Correspondence subject only to post-use reviewWrong. Correspondence is limited to 25 or fewer retail investors in 30 days.
2. B.A public appearance requiring no supervisionWrong. Written mass distribution is not a public appearance, and appearances are supervised too.
3. C.An institutional communication exempt from approvalWrong. Institutional communications go solely to institutional investors, not retail.
4. D.A retail communication requiring registered principal pre-approvalCorrect. Eighty retail recipients exceeds the 25-investor threshold.

Why: A retail communication is any written or electronic communication distributed to more than 25 retail investors within any 30-calendar-day period, and it generally requires prior approval by a registered principal. Citation: FINRA Rule 2210(a)(5),(b)(1). Takeaway: the 25-investor/30-day line separates correspondence from retail communications.