FINRA Answers Questions on BDs' Electronic Communications

FINRA’s response: No. However, while FINRA doesn’t object to BDs’ communications including disclosures that are not required by the rules, BDs “must ensure the additional information does not inhibit an investor’s understanding of the required information.”

Electronic media and design innovations, FINRA states, “may open new ways to present information to investors and focus a communication on the most relevant parts.”

However, ads may sometimes include “rote or prescriptive boilerplate that is irrelevant to the marketing message, or disclosure for purposes other than compliance with rule requirements, such as disclaimers related to business relationships or disclosure about intellectual property. Combining this additional text with more important and relevant disclosure — such as in a single block of fine print text — can detract from the impact of information required for the investor to understand the product or service.”

Another question asks if it’s necessary to disclose risks, costs or other drawbacks in a communication that are unrelated to its content.

FINRA states that while its rules require that communications “be fair and balanced,” they don’t require “them to be exhaustive lists of all possible risks and warnings associated with a product or service. Information about risks, costs or drawbacks is more effective when it is related to the benefits that the communication promotes.”