United States: FINRA Provides Guidance On Disclosure Innovations In Advertising And Other Public Communications

Last Updated: September 30 2019
Article by Edward J. Johnsen and Mary Dunbar

The Financial Industry Regulatory Authority recently published Regulatory Notice 19-31 (the Notice), responding to questions about how members can comply with FINRA's public communication rules (the Communication Rules) when communicating with customers using electronic media, while ensuring that presentations are fair and balanced. The Notice is an interesting read because of its emphasis on providing simpler, more focused disclosure in public communications, rather than the detail-laden boilerplate sometimes seen in broker-dealer advertising and communications. FINRA's goal is to facilitate simplified and more effective disclosures that are more interesting and informative for investors.

The responses and examples in the Notice are not intended to suggest exclusive means for addressing these issues and do not create new requirements. They simply clarify what may be acceptable under current FINRA rules. They also do not address or interpret SEC or other federal or state regulations.

Noting that the Communication Rules are intended to ensure that communications are fair and balanced, and that investors do not receive misleading information, the Notice acknowledges that there are many new and different approaches for achieving this goal as technology continues to transform the means of communication. The Notice encourages firms to consider how best to convey relevant information to investors and responds to questions regarding approaches for making disclosures in electronic media more compelling.

It also provides examples of communications that address the disclosure requirements in creative new ways. Explaining that advances in communication technology allow a broker-dealer to customize how information is provided and the recipient to customize that information according to his or her needs and interests, FINRA welcomes innovative design techniques that can help investors better understand a broker-dealer's products and services.

FINRA acknowledges that disclosures in marketing materials have become very extensive and suggests that not all of those disclosures may be required. Instead, FINRA encourages its members to be "precise and succinct" in explanations and disclosures. While additional information beyond what is required by the Communication Rules may not be objectionable, FINRA does state that the additional information must not inhibit the reader's understanding of the required information. According to FINRA, boilerplate that includes information irrelevant to the marketing message of the communication, or is added for purposes not related to compliance with disclosure rule requirements (for example, disclaimers or disclosures regarding business relationships or intellectual property matters) can detract from the impact of the information needed to understand the product or service. FINRA therefore encourages members to consider how to direct investors to the information required for a fair and balanced communication. To illustrate this point, the Notice provides an example of boilerplate disclosure that makes up more than half the communication, even though the only information required for Communications Rule compliance is found in the last two sentences. FINRA cautions that in such a case, the other information may detract from the presentation of the required information.

The Notice also explains that while the Communication Rules require communications to be fair and balanced, they do not require exhaustive lists of all possible risks and warnings possibly associated with a product or service. According to FINRA, information about risks, costs or drawbacks is more effective when it relates to the benefits the communication is promoting. It is not necessary to disclose risks, costs or other drawbacks in a communication that are unrelated to its content. Moreover, disclosures that are integrated into the body of a marketing message or other communication do not need to be as extensive as disclosures presented in a separate footnote or disclaimer. Instead, integrating disclosures into the message can facilitate shorter, more relevant disclosure. And, because readers may overlook or ignore separate descriptions of risks when they are bundled with other disclosures, providing important information in the body of the communication can improve understanding. FINRA encourages broker-dealers to consider whether information traditionally provided in footnotes and disclaimers can be incorporated in the message.

Finally, with respect to disclosures in educational materials, reference resources and other non-promotional communications, FINRA notes that the extent of required disclosure depends on the type of communication and how it is used in the sales process. While promotional communications that discuss the benefits of particular products, types of products, or services require balanced discussions of risks and drawbacks, non-promotional communications may not require the same level of detail.

Moreover, reference resources, websites, apps and other resources that do not promote specific products or services, but only provide information to assist investment decisions, and which investors must access and interact with to see that information, might need little or no disclosure under FINRA rules.

Finally, post-sale communications that discuss the purchased product, such as changes to a portfolio or information about how a product responded to changes in market conditions, generally do not require the same extent of disclosure as pre-sale communications unless they recommend additional purchases or other products.

The Notice states that FINRA welcomes the opportunity to consult with broker-dealers about the use of innovative design techniques in marketing materials, ways to make communications more interesting and informative, and it how it can work together with its member firms to improve the effectiveness of disclosure.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions