Chapter 9 Practice Question Answers
1. Answer: A. A registered principal must always approve all retail communications before those communications are made public. However, the filing requirement for any form of communication is three years from the date of last, and not first, use. An associated person is never allowed to approve his own retail communications. Finally, although some forms of retail communication need to be filed with FINRA, this is not the case for all retail communications.
2. Answer: C. Firms must file retail communications concerning investment companies with FINRA within 10 business days of their publication or distribution.
3. Answer: A. Sales literature requires prior principal approval. Group correspondence sent to fewer than 25 prospective or existing clients does not need principal approval. Neither does instant messaging or dynamic social media content that does not contain a solicitation to buy or sell securities.
4. Answer: C. Retail communications and correspondence must disclose that an endorsement has been bought, but not the amount of payment. Comparisons between investments or services must disclose material differences, including investment objectives, costs and expenses, and the liquidity and volatility of the investment products.
5. Answer: D. FINRA defines correspondence as any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30-calendar-day period.
6. Answer: B. FINRA member firms that have not been registered with FINRA for at least one