Co-authored by Avi Badash.
The Securities and Exchange Commission has issued Release No. 34-65663 (the Release) requesting comment on the Financial Industry Regulatory Authority’s proposed amendments to its proposed rule change regarding communications with the public. In July, FINRA proposed new FINRA Rule 2210 (the Rule) regarding communications with the public. FINRA proposed that the Rule replace the current six communication categories with three new categories: institutional communication, retail communication, and correspondence, and that the rule prescribe approval, review, record-keeping, filing, and content requirements to such communications. A summary of the proposal can be found in the July 22, 2011 edition of Corporate and Financial Weekly Digest.
In response to concerns raised by the public in comment letters to the SEC, FINRA filed a partial amendment to the proposal. In the amended filing, FINRA: i) clarified that retail communications excepted from the definition of research report must be approved by a principal of the firm if the communication makes any financial or investment recommendation; ii) eliminated certain required filings for retail communications; iii) required certain disclosures in comparative illustrations; iv) changed the category of associated persons whose financial interest in the issuer would have to be disclosed if making a recommendation in a retail communication; v) revised the disclosure standards for public appearances by associated persons that include securities recommendations; and vi) excluded from the content standards certain documentation that has already been filed with the SEC.
The SEC is soliciting comments to the proposal, as amended. Comments are due 30 days after publication in the Federal Register.