SEC Approves FINRA Proposal To Modify Principal Approval Requirement For Certain Sales Material

 

 

[22231]

 

February 12, 2008

TO: ADVERTISING COMPLIANCE ADVISORY COMMITTEE No. 4-08
SEC RULES MEMBERS No. 13-08
SMALL FUNDS MEMBERS No. 8-08
VARIABLE INSURANCE PRODUCTS ADVISORY COMMITTEE No. 10-08     RE: SEC APPROVES FINRA PROPOSAL TO MODIFY PRINCIPAL APPROVAL REQUIREMENT FOR CERTAIN SALES MATERIAL

 

The Securities and Exchange Commission approved amendments to NASD Rule 2210 to create an exception from the principal approval requirement for certain filed sales material and to modify certain recordkeeping requirements. [1]  The Institute supported the proposed amendments, which were approved as proposed. [2]  They were effective as of February 1, 2008 and are summarized below.

 

The rule amendments eliminate the requirement that a principal at an intermediary firm approve the sales material of another firm if the sales material has been filed with the FINRA Advertising Regulation Department (“Department”) and the Department has issued a review letter finding that the material appears to be consistent with applicable standards.  The Release points out that the intermediary firm that relies on this exception could not materially alter or use the sales material in a manner that is inconsistent with any conditions stated in the Department’s review letter.  It also points out that intermediary firms are not precluded from continuing to review sales material.

 

Firms relying on the principal approval exception must keep a record of the name of the firm that filed the sales material with the Department and a copy of the related FINRA review letter.  In addition, the amendments require firms to maintain a copy of all sales material beginning on the date of first use. 

 

 

Dorothy M. Donohue
Senior Associate Counsel

 

 

endnotes

 [1] See Order Approving Proposed Rule Change To Create Exception to Principal Approval Requirements for Certain Filed Sales Material, SEC Release No. 34-57257 (February 1, 2008), 73 FR 7339 (February 7, 2008) (“Release”).  The Release is available on the SEC’s website at http://www.sec.gov/rules/sro/finra/2008/34-57257.pdf.

 

 [2] See Memorandum to SEC Rules Members No. 5-08, Small Funds Members No. 4-08, Advertising Compliance Advisory Committee No. 3-08 and Variable Insurance Products Advisory Committee No. 4-08 [22138], dated January 22, 2008 (summarizing the Institute’s comment letter).