June 4, 1996
TO: DIRECT MARKETING COMMITTEE No. 16-96
SALES FORCE MARKETING COMMITTEE No. 18-96
SUBCOMMITTEE ON ADVERTISING No. 13-96
RE: NASD QUESTIONS AND ANSWERS ON ELECTRONIC COMMUNICATIONS
______________________________________________________________________________
The National Association of Securities Dealers, Inc. recently published the attached "Ask the
Analyst About Electronic Communications" column. Although the NASD has amended its Rules of Fair
Practice specifically to address electronic communications, several commenters, including the Institute,
had asked the NASD to provide further guidance to members with respect to certain issues. The column
is intended to provide such guidance.
The column, among other things, provides the NASDs views on several types of electronic
communications. With respect to electronic bulletin boards, the NASD states that "[c]ommunications
posted by members or their associated persons on electronic bulletin boards, and/or message boards,
would be considered advertisements because such material can be viewed by anyone with access to these
services."
With respect to electronic mail, the NASD distinguishes between "group electronic mail,"
identical messages sent to multiple individuals, and "individual e-mail," personalized messages sent in
lieu of written correspondence. The NASD considers group electronic mail to be "sales literature" and
therefore subject to prior, written approval of a registered principal. For individual e-mail, the NASD
believes that, if it pertains to the solicitation or execution of securities transactions, then the mail is
subject to review and endorsement by a registered principal, which may occur after the correspondence
has been sent. In addition, the sales literature filing requirements do not apply to individual e-mail
transmissions. Finally, the NASD indicates that statements made by a member in a "chat room" would
be analogous to oral statements made in a public forum, and therefore would not generally be considered
to be correspondence, sales literature, or advertising under the Rules of Fair Practice.
In addition to electronic mail issues, the NASD has addressed several other emerging and
important issues, including the filing obligations of members who use Internet sites, the use by members
of "broker-dealer use only" materials on the Internet, and the obligations of members when linking
materials from other Internet sites to their sites.
Alexander C. Gavis
Assistant Counsel
Attachment