Communications with the Public and Public Appearances
Fair and balanced
FINRA Rule 2210 requires communications with the public to be fair and balanced and free of false, misleading, exaggerated, or promissory statements. Research recommendations must explain the basis for the recommendation and disclose risks. Projections are allowed only with a reasonable basis and clearly stated assumptions.
Public appearances
A public appearance is an oral or written statement made in a public forum, such as television, radio, a seminar, or a webcast. Analysts making public appearances must disclose conflicts-ownership, investment banking relationships, and compensation-and must present a balanced view. If the analyst cannot make the required disclosures, the analyst should not make a recommendation. Public appearances generally do not require the same pre-approval as retail communications, but they remain subject to supervision and recordkeeping.
Traps
Do not call a scripted television segment a research report; it is a public appearance. Do not assume disclosures can be omitted because the segment is short. Avoid words such as 'guaranteed,' 'risk-free,' or 'assured.' A public appearance that includes a recommendation carries the same fair-balance discipline as a written report.
Worked example
An analyst says on air, 'This stock is a sure thing-buy it now.' That is promissory and unbalanced. A better statement is, 'Our Buy rating reflects a discounted cash flow model; the key risk is margin compression,' provided conflicts are disclosed.
Rule of thumb
If a statement cannot be balanced or accompanied by required disclosures, do not make the recommendation in that forum.