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2215. Communications with the Public Regarding Security Futures

(a) FINRA Filing Requirements
(1) As set forth in paragraph (c)(2) of Rule 2210, a member must submit all retail communications concerning security futures to FINRA's Advertising Regulation Department at least 10 business days prior to first use.
(2) The requirements of this paragraph (a) shall not be applicable to:
(A) retail communications concerning security futures that are submitted to another self-regulatory organization having comparable standards pertaining to such retail communications, and
(B) retail communications in which the only reference to security futures is contained in a listing of the services of a member.
(b) Standards Applicable to Security Futures Communications
(1) Communications Used Prior to Delivery of the Security Futures Risk Disclosure Statements
(A) All communications concerning security futures shall be accompanied or preceded by the security futures risk disclosure statement unless they meet the following requirements:
(i) Such communications must be limited to general descriptions of the security futures being offered.
(ii) Such communications must contain contact information for obtaining a copy of the security futures risk disclosure statement.
(iii) Such communications must not contain recommendations or past or projected performance figures, including annualized rates of return, or names of specific securities.
(B) Communications concerning security futures that meet the requirements of paragraphs (b)(1)(A)(i) through (iii) may have the following characteristics:
(i) the text of the communication may contain a brief description of security futures, including a statement that identifies registered clearing agencies for security futures. The text may also contain a brief description of the general attributes and method of operation of the securities exchange or notice-registered securities exchange on which such security futures are traded, including a discussion of how a security future is priced;
(ii) the communication may include any statement required by any state law or administrative authority; and
(iii) advertising designs and devices, including borders, scrolls, arrows, pointers, multiple and combined logos and unusual type faces and lettering as well as attention-getting headlines and photographs and other graphics may be used, provided such material is not misleading.
(2) General Standards
(A) No member or associated person of a member shall distribute or make available any communication concerning a security future that:
(i) contains any statement suggesting the certain availability of a secondary market for security futures;
(ii) fails to reflect the special risks attendant to security futures transactions and the complexities of certain security futures investment strategies;
(iii) fails to include a warning to the effect that security futures are not suitable for all investors or contains suggestions to the contrary; or
(iv) fails to include a statement that supporting documentation for any claims (including any claims made on behalf of security futures programs or the security futures expertise of sales persons), comparisons, recommendations, statistics or other technical data, will be supplied upon request.
(B) Paragraphs (b)(2)(A)(iii) and (b)(2)(A)(iv) do not apply to institutional communications as defined in Rule 2210(a)(3).
(C) Any statement referring to the potential opportunities or advantages presented by security futures must be balanced by a statement of the corresponding risks. The risk statement must reflect the same degree of specificity as the statement of opportunities, and must avoid broad generalities.
(3) Projections
Notwithstanding the provisions of Rule 2210(d)(1)(F), security futures communications may contain projected performance figures (including projected annualized rates of return), provided that:
(A) all such communications must be accompanied or preceded by the security futures risk disclosure statement;
(B) no suggestion of certainty of future performance is made;
(C) parameters relating to such performance figures are clearly established;
(D) all relevant costs, including commissions, fees, and interest charges (as applicable) are disclosed and reflected in the projections;
(E) such projections are plausible and are intended as a source of reference or a comparative device to be used in the development of a recommendation;
(F) all material assumptions made in such calculations are clearly identified;
(G) the risks involved in the proposed transactions are disclosed; and
(H) in communications relating to annualized rates of return, that such returns are not based upon any less than a 60-day experience; any formulas used in making calculations are clearly displayed; and a statement is included to the effect that the annualized returns cited might be achieved only if the parameters described can be duplicated and that there is no certainty of doing so.
(4) Historical Performance
Security futures communications may feature records and statistics that portray the performance of past recommendations or of actual transactions, provided that:
(A) all such communications must be accompanied or preceded by the security futures risk disclosure statement;
(B) any such portrayal is done in a balanced manner, and consists of records or statistics that are confined to a specific "universe" that can be fully isolated and circumscribed and that covers at least the most recent 12-month period;
(C) such communications include the date of each initial recommendation or transaction, the price of each such recommendation or transaction as of such date, and the date and price of each recommendation or transaction at the end of the period or when liquidation was suggested or effected, whichever was earlier; provided that if the communications are limited to summarized or averaged records or statistics, in lieu of the complete record there may be included the number of items recommended or transacted, the number that advanced and the number that declined, together with an offer to provide the complete record upon request;
(D) all relevant costs, including commissions, fees, and daily margin obligations (as applicable) are disclosed and reflected in the performance;
(E) whenever such communications contain annualized rates of return, all material assumptions used in the process of annualization are disclosed;
(F) an indication is provided of the general market conditions during the period(s) covered, and any comparison made between such records and statistics and the overall market (e.g., comparison to an index) is valid;
(G) such communications state that the results presented should not and cannot be viewed as an indicator of future performance; and
(H) a principal qualified to supervise security futures activities determines that the records or statistics fairly present the status of the recommendations or transactions reported upon and so initials the report.
(c) Security Futures Programs
In communications regarding a security futures program (i.e., an investment plan employing the systematic use of one or more security futures strategies), the cumulative history or unproven nature of the program and its underlying assumptions must be disclosed.
(d) Standard Forms of Worksheets
Such worksheets must be uniform within a member. If a member has adopted a standard form of worksheet for a particular security futures strategy, nonstandard worksheets for that strategy may not be used.
(e) Recordkeeping
Communications that portray performance of past recommendations or actual transactions and completed worksheets shall be kept at a place easily accessible to the sales office for the accounts or customers involved.
Amended by SR-FINRA-2011-035 eff. Feb. 4, 2013.
Amended by SR-NASD-2000-12 eff. Nov. 3, 2003.
Adopted by SR-NASD-2002-40 eff. Oct. 15, 2002.

Selected Notice: 12-29.

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