Exam Alert: FINRA provides guidance on TIPS fund advertising

On October 27, 2011, FINRA provided guidance on its rules that govern communications with the public regarding Treasury Inflation-Protected Securities (TIPS) funds. Specifically, if a TIPS fund’s current yield is adjusted monthly based on changes in the inflation rate, communication must explain that these changes can cause the yield to vary greatly from month to month. If an advertisement includes an unusually high current yield, “the material must disclose that the yield is attributable to the rise in the inflation rate, which might not be repeated.” Continue reading

On October 27, 2011, FINRA provided guidance on its rules that govern communications with the public regarding Treasury Inflation-Protected Securities (TIPS) funds.  Specifically, if a TIPS fund’s current yield is adjusted monthly based on changes in the inflation rate, communication must explain that these changes can cause the yield to vary greatly from month to month.  If an advertisement includes an unusually high current yield, “the material must disclose that the yield is attributable to the rise in the inflation rate, which might not be repeated.”

Source: FINRA Regulatory Notice 11-49

This alert is relevant to the Series 6, 7, 24, 26, 62, and 82.

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