SIE Ready🛡️ Compliance Considerations · Lesson 5 of 6 · 5 min
25 in 30: Communications Rules
📣 The same sentence can be correspondence, a retail communication or an institutional communication. Which one it is depends on who receives it and how many.
💡 Key idea
Correspondence: 25 or fewer retail investors in 30 days. Retail: more than 25, principal approval before use. Institutional: institutions only. No promises or guarantees anywhere.
🧠 Why it matters
Rule 2210 has three types. CORRESPONDENCE goes to 25 or fewer retail investors within any 30 calendar-day period ('25 in 30'); it needs no pre-approval but is supervised and reviewed. A RETAIL COMMUNICATION reaches more than 25 retail investors in 30 days; a principal approves it BEFORE use, and for its first year a new member files those used in public media at least 10 business days before first use. An INSTITUTIONAL COMMUNICATION goes only to institutional investors and is covered by supervisory procedures. All must be fair and balanced: no promises, no guarantees and, apart from narrow exceptions, no performance projections. Testimonials about the firm's advice need disclosures. Example: one email to 40 retail customers is retail.
📈 In the real world
📧 Rep Marco drafts a market-outlook email for his 18 retail customers. That is correspondence and can go out under normal supervision. His manager loves it and wants to send it to the whole branch list of 600. Now it is a retail communication, and a principal has to approve it before anyone hits send.
📌 Takeaways
- '25 in 30': 25 or fewer retail investors in 30 days is correspondence
- Retail communications need principal approval before use; new firms file for their first year
- Fair and balanced always: no promises, no guarantees, no projections except narrow exceptions
📖 Terms in this lesson
Retail communication: Any written communication sent or made available to more than 25 retail investors within a 30-day period.
Correspondence: Any written communication sent or made available to 25 or fewer retail investors within a 30-day period.
Institutional communication: Written communication sent or made available only to institutional investors, not to any retail investor.
✅ Test yourself
A rep emails the same written commentary to 30 retail investors over two weeks. How is it classified under FINRA Rule 2210?
- Correspondence
- Public appearance
- Retail communication
- Institutional communication
Answer: C · Retail communication
More than 25 retail investors within a 30 calendar-day period makes it a retail communication. Correspondence stops at 25, institutional means institutions only, and a public appearance is spoken, not written.
Which communication generally requires approval by a registered principal before it is used?
- An institutional communication
- An email to one retail customer
- A reply to a customer's question about her statement
- A retail communication
Answer: D · A retail communication
Retail communications need principal approval before use. Correspondence (like a single customer email or a reply) and institutional communications are covered by supervision and review procedures instead of pre-approval.
Which statement would be prohibited in a broker-dealer's retail communication?
- Past performance does not guarantee future results
- This fund is guaranteed to beat inflation
- The fund invests mainly in large-cap stocks
- Fees and expenses are listed in the prospectus
Answer: B · This fund is guaranteed to beat inflation
Promising a result is a promissory, misleading claim that Rule 2210 prohibits. The other statements are factual or balancing disclosures that are permitted and often expected.
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