Seeking Business: Prospecting and Communications with the Public
Prospecting is regulated speech
A rep builds business through cold calls, seminars, mailings, email, social media and referrals, and nearly every one of those is a communication with the public under FINRA Rule 2210. The rule sorts communications by audience: correspondence (written or electronic messages to 25 or fewer retail investors in any 30-day period), retail communications (more than 25 retail investors in 30 days), and institutional communications. Only retail communications require principal pre-approval before first use; correspondence must be supervised but need not be pre-approved. Firms in their first year of membership must file retail communications with FINRA's Advertising Regulation Department at least 10 business days before first use, and mutual fund, ETF and options materials carry their own filing rules.
Content standards matter more than labels: everything must be fair and balanced, may not be misleading or omit material facts, may not project or promise performance, must show risk alongside reward, and must carry the member's name. Testimonials about past performance need disclosure that the results are not typical. Hypothetical illustrations get extra scrutiny.
Cold calling is limited by the national Do Not Call Registry, the firm's own do-not-call list, and permitted calling hours. A second trap is compensation: paying an unregistered person for a referral is prohibited, and finder's fees are limited to what FINRA Rule 2040 permits.
Worked example. A rep emails a fund fact sheet to 40 prospects. That is a retail communication - no principal approval, no distribution. Cut the list to 25 or fewer and it becomes correspondence that a supervisor reviews after the fact.