A broker-dealer prepares an advertisement discussing equity options strategies for retail customers. Who must approve it in writing before first use under FINRA Rule 2220?

A Registered Options Principal designated by the firm

A member's retail communication recommends a specific bond to the public. Which of the following is NOT among the disclosures required by FINRA Rule 2210(d)(5) for such a communication?

A statement guaranteeing the bond's credit rating will not be downgraded within the next 12 months

A retail advertisement uses a customer testimonial saying "I earned 22% and everyone will too," omits whether the client was compensated, and fails to discuss investment risk. Which defect is most fundamental?

The claim is misleading and lacks required context or applicable disclosures, regardless of possible testimonial use.

A registered representative posts static content to a social media profile, such as background or biographical information, that remains visible until affirmatively changed. How is this content classified under FINRA guidance, and what approval must it receive before posting?

Retail communication, requiring prior principal approval before it is posted

Series 24 Public Communications Practice Questions

Question 1
A broker-dealer prepares an advertisement discussing equity options strategies for retail customers. Who must approve it in writing before first use under FINRA Rule 2220?
- A. Any registered representative with options approval and Series 7 registration
- B. The firm's AML compliance officer, who reviews content for fair dealing
- C. The Options Clearing Corporation, through a pre-clearance review
- D. A Registered Options Principal designated by the firm
Show answer and explanation
Correct answer: D. A Registered Options Principal designated by the firm
Rule 2220 requires options communications to be approved in writing by a Registered Options Principal before first use, in addition to the general principal approval framework of Rule 2210. The approver must have the qualifications for options supervision.
- A. A representative is not a principal and lacks authority to approve communications.
- B. An AML compliance officer's role does not include approving options communications.
- C. The OCC does not pre-clear a broker-dealer's advertisements.
- D. Correct: a Registered Options Principal must approve options communications before use.
Question 2
A member's retail communication recommends a specific bond to the public. Which of the following is NOT among the disclosures required by FINRA Rule 2210(d)(5) for such a communication?
- A. Disclosure of the price of the security at the time the recommendation is made
- B. Disclosure of whether the firm makes a market in the security recommended
- C. Disclosure that the firm and/or its associated persons may have a financial interest in the recommended security, if applicable
- D. A statement guaranteeing the bond's credit rating will not be downgraded within the next 12 months
Show answer and explanation
Correct answer: D. A statement guaranteeing the bond's credit rating will not be downgraded within the next 12 months
Rule 2210(d)(5) requires that a communication recommending a specific security disclose the price at the time the recommendation is made, whether the firm makes a market in the security, and whether the firm or its associated persons have a financial interest in the security or have provided investment banking services to the issuer, among other required disclosures. Choice D isn't merely 'not required' — it's affirmatively prohibited: Rule 2210(d)(1) bars promissory, exaggerated, or guaranteed-outcome statements, since no firm can guarantee a rating won't change.
- A. Disclosure of the security's price at the time of the recommendation is a required element under Rule 2210(d)(5), so this is not the answer.
- B. Disclosure of whether the firm makes a market in the recommended security is a required element under Rule 2210(d)(5), so this is not the answer.
- C. Disclosure of any financial interest the firm or its associated persons may have in the recommended security is a required element under Rule 2210(d)(5), so this is not the answer.
- D. A guaranteed statement about a bond's future credit rating is not a required disclosure -- and would itself be a prohibited, misleading guarantee -- making this the correct answer to what is NOT required.
Question 3
A retail advertisement uses a customer testimonial saying "I earned 22% and everyone will too," omits whether the client was compensated, and fails to discuss investment risk. Which defect is most fundamental?
- A. Client testimonials are prohibited in retail communications under FINRA rules, so the advertisement must be withdrawn for that reason.
- B. The claim is misleading and lacks required context or applicable disclosures, regardless of possible testimonial use.
- C. A prominent testimonial from a satisfied client generally satisfies the balance requirement and reduces the need for separate risk disclosure.
- D. The size and typeface of the testimonial determine compliance, so enlarging the disclosure font would cure the advertisement.
Show answer and explanation
Correct answer: B. The claim is misleading and lacks required context or applicable disclosures, regardless of possible testimonial use.
The advertisement implies that a single result is typical and omits risk, so it is not fair and balanced. Testimonials are not prohibited, but they require appropriate disclosures and cannot imply guaranteed or typical returns.
- A. Testimonials are permitted if the content and disclosure requirements are met, so a ban is not the defect.
- B. The statement promises results others will share and gives no risk context, making it misleading.
- C. A favorable testimonial does not replace the balanced presentation of risks.
- D. Presentation format cannot cure misleading content or missing disclosures.
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Question 4
A registered representative posts static content to a social media profile, such as background or biographical information, that remains visible until affirmatively changed. How is this content classified under FINRA guidance, and what approval must it receive before posting?
- A. Retail communication, requiring prior principal approval before it is posted
- B. Public appearance, exempt from Rule 2210
- C. Piece of correspondence, requiring review but not prior approval
- D. Institutional communication
Show answer and explanation
Correct answer: A. Retail communication, requiring prior principal approval before it is posted
FINRA guidance (Regulatory Notice 11-39 and related guidance) draws a line between static and interactive social media content. Static content — profile information, background pages, and similar content that stays posted until affirmatively changed — is treated like an advertisement/retail communication and generally requires prior principal approval under Rule 2210(b)(1) before it is posted. Interactive, real-time content (e.g., live wall posts, comment threads) is instead treated more like correspondence or a public appearance, subject to supervision but not prior approval.
- A. Static social media content such as background/biographical information is treated as retail communication under FINRA guidance and requires prior principal approval before it is posted.
- B. Static content is not a 'public appearance' (which covers live, interactive formats); it therefore does not qualify for that exemption from Rule 2210.
- C. This static content requires prior approval, not just post-hoc review as correspondence would receive.
- D. This is not institutional communication, since it is directed at the general public/retail audience rather than solely institutional investors.

Series 24 Public Communications Practice Questions

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