FINRA clarifies the use of video, links in the FAQ on advertising rules

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The link itself, or the text in the communication that introduces the link, should state what will be provided through the link, FINRA said.

“Historically, FINRA has interpreted communications with public rules to allow hyperlinks to additional explanations and information in various situations,” FINRA said.

For example, FINRA Rule 2210 “allows companies to use hyperlinks in banner ads to generate interest in a topic and provide more information through hyperlinks, and FINRA has interpreted Rule 2210 of FINRA to allow companies to link to required testimonial information ”.

This approach, FINRA said, is also consistent with the treatment of hyperlinks in the Investment Advisor Marketing Rule recently adopted by the SEC under the Investment Advisors Act of 1940.

The SEC’s Marketing Rule Adopting Release notes that the use of the “fair and balanced” rule is closely aligned with the general standards of FINRA Rule 2210, and that investment advisers can use layered disclosure that use hyperlinks to meet these requirements, FINRA said.

No target return

A broker cannot include a “target return” in a private placement communication if the communication also includes the assumptions and key risks underlying the return, FINRA said.

FINRA Rule 2210 (d) (1) (F) prohibits predictions or projections of performance, the implication that past performance will recur, and any exaggerated or unjustified claim, opinion or forecast.

“Targeted returns reflect the expected receipt of future cash flows by investors and are not guaranteed. These returns can include cash flows based on contractual income sources such as framework leases or sales contracts, ”explained FINRA.

“Such forward-looking cash flows necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projection of future performance or results expressed or implied by such forward-looking measures, ”he mentioned.


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