Income Without Worry

The branch manager's signature is not sufficient. Communications about options must be approved in advance by a Registered Options Principal, in addition to the general principal pre-approval that applies to retail communications. Because this is going to 400 retail prospects - a mass audience, not a one-off letter to a single existing customer - it is a retail communication and needs principal approval before first use, plus any firm-level review your procedures require for materials containing performance.

A Series 7 assistant cannot supply that approval; principal approval means a registered principal, and options content means an options principal.

Practical sequencing: ROP review for options-specific content (risk disclosure, strategy description, the disclosure document requirement), then principal/compliance sign-off on performance claims and testimonials, then a decision on whether the seminar itself needs a registered presenter. Having the assistant present an options seminar to prospects raises a separate issue: the person explaining the strategy should be qualified to solicit it. Expect the ROP to require Dave or another registered representative to present.

Four problems, in descending order of severity:

1. "Principal is guaranteed by the stock you own." A covered call does not guarantee principal. The stock can fall far more than the premium received, and the strategy caps upside while retaining downside. This is a promissory, unwarranted statement and is the kind of claim that generates arbitrations. Delete it entirely; it is not salvageable.
2. "Hypothetical backtested results" for a strategy never run. Hypothetical or backtested performance for a strategy the firm has not actually managed is prohibited in retail communications, and it would be misleading even with footnotes. Delete.
3. The testimonial - "I have never lost money with Dave's puts." Client testimonials about performance are treated as misleading in this context, particularly an absolute claim of no losses. Delete.
4. The 11.4% five-year average. Real performance may be presented if it is actual, verifiable, net of fees and costs where applicable, presented with the time period and the fact that past performance does not guarantee future results. If the track record cannot be substantiated from firm records, it goes too.

What survives: a factual description of the covered call strategy, its mechanics, its risks (including that the underlying stock retains full downside), the required options disclosure, and balanced risk disclosure. That is a thin but defensible flyer.

Treat it as an unapproved retail communication that has already reached the public.

Immediate steps: (1) confirm the mailing date, recipient list, and whether any recipient acted; (2) issue a written correction to the recipients if the claims are material and misleading - especially the "guaranteed principal" line; (3) pull any web or social media version of the same content; (4) interview Dave and the branch manager about how an unauthorized mailing cleared the office; and (5) evaluate whether the customer who already complained should be handled by a different representative, given the complaint history and the identical subject matter.

Records: the final flyer as mailed, the recipient list, proof of the ROP and principal approval (or the absence of it), the retention file showing three years of retention with the first two readily accessible, the seminar script and any slides, the presenter's qualifications, and the correction notice. If the approval trail cannot be produced, the firm has both a content violation and a books-and-records problem, and the supervisory finding should say so.