Communication with Customers and Prospects
The governing standard
State anti-fraud rules reach every communication - written, electronic, or oral. Materials must be fair and balanced, must not omit material facts, and must not mislead by implication, layout, or emphasis.
What must appear and what must not
Retail communications must identify the firm, be approved by a registered principal before use, and be retained. Testimonials are permitted only with disclosure of whether the speaker was compensated and a statement that the experience is not typical. Performance figures must be presented with the periods shown and the caveat that past results do not predict future results. Prohibited content includes guarantees against loss, predictions or projections of investment results, misleading use of the word "free" when conditions attach, and unsubstantiated comparisons. Static social media posts are treated like advertising; a live interactive post resembles ordinary correspondence but is still a business communication and must be supervised.
State filing
Most states do not pre-approve advertising. The Administrator acts after the fact through rules, orders, and enforcement. Assuming a state must bless a brochure before it is used is a classic wrong answer.
Traps
Candidates forget that a single oral statement can be fraud. They also forget that a seminar invitation omitting the sales purpose, or a cherry-picked track record with no time period, is misleading even if every number in it is true.
Worked example: A brochure states "Our clients averaged 14% annually." No period is shown and no disclosure of survivorship bias is given. The claim is misleading and the adviser faces an anti-fraud violation regardless of whether every figure is accurate.