Welcome Remarks and Current Developments Thursday, October

© 2017 Financial Industry Regulatory Authority, Inc. All rights reserved. 1

Welcome Remarks and Current Developments Thursday, October 5 10:00 a.m. – 11:15 a.m. Join this session to hear from experts regarding changes to the advertising rules resulting from FINRA’s retrospective rule review, including the proposal to permit investment planning projections, recent FINRA guidance, and efforts to modify disclosure methods and content. The panel also includes a discussion of the FINRA Corporate Financing Rule proposal.

Introduction: Thomas Pappas Vice President FINRA Advertising Regulation Moderator: Joseph Savage Vice President and Counsel FINRA Office of Regulatory Analysis Panelists: Alexander Gavis Senior Vice President and Deputy General Counsel Fidelity Investments LLC Thomas Pappas Vice President FINRA Advertising Regulation Joseph Price Senior Vice President and Counsel FINRA Corporate Financing/Advertising Regulation

I. Welcome and Opening Remarks II. Introduction to Panel III. Retrospective Rule Review of Communications Rules

A. Recent Revisions to Rule 2210 B. Proposal to Permit Investment Planning Projections C. Disclosure Initiative

IV. Other Developments A. Related Performance Interpretive Letters B. Proposed Changes to FINRA Corporate Financing Rule C. SEC Risk Alert on Investment Adviser Advertising


V. Questions and Answers


Current Developments Panelist Bios: Introduction: Thomas A. Pappas is Vice President of the FINRA Advertising Regulation Department, which regulates the advertisements, sales literature and correspondence used by FINRA member firms. His responsibilities include rule development, management of the filing and surveillance programs and related enforcement activities. He served in the same role at NASD before its 2007 consolidation with NYSE Member Regulation, which resulted in the formation of FINRA. He was previously registered with Davenport & Company LLC. He received a bachelor’s degree from The University of Richmond and an MBA from Virginia Commonwealth University. Moderator: Joseph P. Savage is Vice President and Counsel in FINRA’s Regulatory Policy Department. Mr. Savage specializes in a broad range of securities regulatory matters, including investment management, investment company, advertising and broker-dealer issues, and regularly appears at conferences regarding these issues. Prior to joining FINRA, he was an Associate Counsel with the Investment Company Institute and an attorney with the law firms of Morrison & Foerster LLP and Hunton & Williams. Mr. Savage also served as a judicial law clerk for United States District Judge John P. Vukasin of the Northern District of California. Mr. Savage holds a bachelor’s degree from the University of Virginia, a master’s degree in public policy from the University of California, Berkeley, and a J.D. from the University of California, Hastings College of the Law, where he served as Note Editor of the Hastings Law Journal. Panelists: Alexander C. Gavis is Senior Vice President & Deputy General Counsel in the Corporate Legal Department of FMR LLC, the parent company of Fidelity Investments, one of the largest brokerage and mutual fund companies in the United States and the leading provider of workplace retirement savings plans. He manages a team of attorneys and professionals responsible for providing legal services to the firm's retail brokerage, stock plan and workplace retirement businesses. He also oversees and manages legal services for Fidelity's businesses involved in electronic and mobile commerce, start-up innovation, and social media. Mr. Gavis provides legal advice on all of Fidelity’s national advertising and marketing initiatives. Prior to joining Fidelity in 1997, Mr. Gavis served as Assistant Counsel at the Investment Company Institute and as Senior Counsel in the Office of General Counsel at the U.S. Securities and Exchange Commission, both in Washington, DC. He also served as a judicial law clerk for The Honorable William T. Allen, Chancellor of the Court of Chancery for the State of Delaware. He has worked in investment banking in New York at Salomon Brothers Inc, handling mergers and acquisitions. Mr. Gavis received his J.D., cum laude, from the University of Pennsylvania Law School, where he served as Editor-in-Chief of the University of Pennsylvania Law Review, and his bachelor’s degree, with High Honors and Phi Beta Kappa, from Swarthmore College. As an adjunct professor at Suffolk University Law School, he teaches the class “Designing Thinking for Lawyers and Business Professionals” and has taught at the Stanford University Design and Law Schools and at Harvard Law School. Mr. Gavis currently serves as chair of FINRA’s Public Communications Committee and past member of the Social Media Task Force (chair) and E-Brokerage (chair) and Membership Committees. Thomas A. Pappas is Vice President of the FINRA Advertising Regulation Department, which regulates the advertisements, sales literature and correspondence used by FINRA member firms. His responsibilities include rule development, management of the filing and surveillance programs and related enforcement activities. He served in the same role at NASD before its 2007 consolidation with NYSE Member Regulation, which resulted in the formation of FINRA. He was previously registered with Davenport & Company LLC. He received a bachelor’s degree from The University of Richmond and an MBA from Virginia Commonwealth University. Joseph E. Price is Senior Vice President, Corporate Financing/Advertising Regulation, at the Financial Industry Regulatory Authority. The FINRA Corporate Financing Department regulates capital-raising activities of broker/dealers; including equity, debt, REIT, closed-end fund, limited partnership offerings and private placements. The FINRA Advertising Regulation Department regulates broker/dealer sales


materials, mutual fund advertisements, social media and other communications with the public. Mr. Price previously worked in various capacities at the Securities and Exchange Commission. He was an Assistant General Counsel and a Special Counsel in the Office of General Counsel and he was the Deputy Chief of the Office of Disclosure and Investment Adviser Regulation in the Division of Investment Management. Prior to working at the SEC, he was a litigator in the Bureau of Competition at the Federal Trade Commission. Mr. Price also worked as a Compliance Investigator at the Coffee, Sugar & Cocoa Exchange. He was an Adjunct Professor at Georgetown University Law Center from 1994 to 2002, where he taught “Current Issues in Securities Regulation” and “Disclosure under the Federal Securities Laws.” He graduated with distinction in economics from the University of Wisconsin and received his J.D. from Fordham University.

2017 Advertising Regulation ConferenceOctober 5 – 6, 2017 | Washington, DC

Welcome Remarks and Current

Developments

FINRA Advertising Regulation Conference | © 2017 FINRA. All rights reserved.

Introduction

Thomas Pappas, Vice President, FINRA Advertising Regulation

Moderator

Joseph Savage, Vice President and Counsel, FINRA Office of Regulatory Analysis

Panelists

Alexander Gavis, Senior Vice President and Deputy General Counsel, Fidelity Investments LLC


Joseph Price, Senior Vice President and Counsel, FINRA Corporate Financing / Advertising Regulation

1

Panelists


Regulatory Notice 16-41 (SEC Approves Amendments to Rules Governing Communications With the Public)

Investment Company Shareholder Reports.

Investment Company Rankings Backup Material.

Generic Investment Company Communications.

Investment Analysis Tools.

Templates.

Bond Mutual Fund Volatility Ratings Communications.

Rule Changes Effective as of January 9, 2017.

2

Recent Revisions to Rule 2210


Regulatory Notice 17-06 (FINRA Requests Comment on Proposed Amendments to Rules Governing Communications with the Public)

Current Projections Rule

Proposal

– Customized Hypothetical Investment Planning Illustrations

– Asset Allocation or Other Investment Strategy

– Reasonable Basis

– Required Disclosures

Comments on Proposal

3

Investment Planning Illustration Projections


Disclosures in Firm Communications

Stanford Law School Disclosure Project

FINRA Staff Disclosure Analysis

Required

Supplemental

Other

4

Disclosure Initiative


Institutional Communications Only

Hartford Funds Distributors, LLC (2015)

K&L Gates LLP (2017)

Conditions for Interpretive Relief

Advertising Regulation FAQs

6

Related Performance Interpretive Letters


Regulatory Notices 17-14 (FINRA Requests Comment on FINRA Rules Impacting Capital Formation) and 17-15 (FINRA Requests Comment on Proposed Amendments to the FINRA Corporate Financing Rule)

Corporate Financing Rule Proposal

Filing Requirements and Exemptions

Disclosure Requirements

Underwriting Compensation

Other Provisions

Comments on Proposal

7

FINRA Corporate Financing Rule Proposal


OCIE List of Compliance Issues for RIAs:

Misleading Performance Results

Misleading One-on-One Presentations

Claims of Compliance with Voluntary Performance Standards

Cherry-Picked Profitable Stock Selections

Misleading Selection of Recommendations

Policies and Procedures

Observations from Touting Initiative

8

SEC Risk Alert on Investment Adviser Advertising

FINRA Advertising Regulation Conference | © 2017 FINRA. All rights reserved. 9

Questions & Answers


Welcome Remarks and Current Developments Thursday, October 5 10:00 a.m. – 11:15 a.m. Resources Recent Revisions to Rule 2210

FINRA Regulatory Notice 16-41, SEC Approves Amendments to Rules Governing Communications with the Public (October 2016)

www.finra.org/industry/notices/16-41

Proposal to Permit Investment Planning Illustrations

FINRA Regulatory Notice 17-06, FINRA Requests Comment on Proposed Amendments to Rules Governing Communications with the Public (February 2017)


Disclosure Initiative:

Margaret Hagan, Stanford Law School Law and Institute of Design, Designing 21st-Century Disclosures for Financial Decision Making (Summer 2016)

www-cdn.law.stanford.edu/wp-content/uploads/2016/10/Hagan-Designing-21st-Century-Disclsoures-for-Wise-Financial-Decision-Making-FINAL-2016.pdf

Related Performance Interpretive Letters:

Interpretive Letter to Clair Pagnano, K&L Gates (June 9, 2017)

www.finra.org/industry/interpretive-letters/june-12-2017-1200am Proposed Changes to FINRA Corporate Financing Rule:

FINRA Regulatory Notice 17-14 (FINRA Requests Comment on FINRA Rules Impacting Capital Formation) (April 2017) www.finra.org/industry/notices/17-14

FINRA Regulatory Notice 17-15 (FINRA Requests Comment on Proposed Amendments to Corporate Financing Rule) (April 2017) www.finra.org/industry/notices/17-15

http://www.finra.org/industry/notices/16-41


https://www-cdn.law.stanford.edu/wp-content/uploads/2016/10/Hagan-Designing-21st-Century-Disclsoures-for-Wise-Financial-Decision-Making-FINAL-2016.pdf

https://www-cdn.law.stanford.edu/wp-content/uploads/2016/10/Hagan-Designing-21st-Century-Disclsoures-for-Wise-Financial-Decision-Making-FINAL-2016.pdf

http://www.finra.org/industry/interpretive-letters/june-12-2017-1200am




SEC Risk Alert on Investment Adviser Advertising

SEC Office of Compliance Inspections and Examinations, National Exam Program Risk Alert, Vol. VI, Issue 6 (The Most Frequent Advertising Rule Compliance Issues Identified in OCIE Examinations of Investment Advisers) (September 14, 2017) www.sec.gov/files/risk-alert-advertising.pdf

https://www.sec.gov/files/risk-alert-advertising.pdf


Advertising Compliance Boot Camp: Fundamentals of FINRA Rule 2210 Thursday, October 5 11:30 a.m. – 12:30 p.m. Designed for compliance and marketing professionals who are new to FINRA’s advertising rules or experienced practitioners interested in a refresher. This session provides an overview of FINRA’s Communications With the Public rule, including the filing requirements, internal approval and supervision, and the content standards. FINRA panelists answer questions about how to apply the rules to financial services communications and marketing materials, while providing tips on how to submit communications for review by Advertising Regulation Department staff.

Moderator: Gregory Riviello Director FINRA Advertising Regulation Panelists: Stephanie Gregory Principal Analyst FINRA Advertising Regulation Timothy Holland Manager FINRA Advertising Regulation Steven O'Mara Associate Director FINRA Advertising Regulation

I. Introduction

II. Advertising Regulation Department overview

III. Definitions, supervision and filing requirements A. Internal approval and recordkeeping B. Retail filing requirements and exemptions

IV. Content standards

A. General content standards B. Specific content standards

V. Wrap-up


Advertising Compliance Boot Camp: Fundamentals Panelist Bios: Moderator: Gregory Riviello is a director in FINRA’s Advertising Regulation Department which is responsible for the regulation of FINRA member firms’ communications with the public. Mr. Riviello is responsible for supervising the daily activities of 25 staff devoted to the review of communications filed with the Department. He provides guidance to Department staff and FINRA firms on the application of the advertising rules and interpretations and also assists with the development of these rules. His other responsibilities include coordinating the Department’s recruiting, training and quality control functions. Mr. Riviello has spoken about various advertising regulation topics at industry events and at the FINRA Advertising Regulation Conferences. Mr. Riviello has more than 35 years of experience in the securities industry including 27 years with the Advertising Regulation Department. He is a graduate of West Chester State University in West Chester, Pennsylvania, and holds an MBA from the University of Maryland. Panelists: Stephanie Gregory is Principal Analyst in FINRA's Advertising Regulation Department. Prior to joining FINRA in 2004, Ms. Gregory worked in compliance and advertising review with a member firm. Ms. Gregory received a bachelor’s degree in economics and political science from Boston University, and her law degree from Pennsylvania State University Dickinson School of Law. Timothy P. Holland is a manager in the FINRA Advertising Regulation Department, and assists in supervising the activity of a group of analysts that reviews sales communications filed by member firms. Mr. Holland joined the Advertising Regulation Department in 2004. He also worked in the CRD/Public Disclosure Department of NASD from 1996 to 2000. Mr. Holland has bachelor’s degrees from the University of Maryland at College Park and received his law degree from The Catholic University of America, Columbus School of Law. Steven O’Mara is Associate Director in FINRA’s Advertising Regulation Department. Before joining Advertising Regulation, he spent three years in the Market Regulation Department. He also worked for four years as a compliance officer for a regional brokerage firm. Mr. O’Mara holds a master’s degree in business from Johns Hopkins University and a bachelor’s degree from Saint Anselm College.


Advertising Compliance Boot Camp:

Fundamentals of FINRA Rule 2210

0


Moderator

Gregory Riviello, Director, FINRA Advertising Regulation

Panelists

Stephanie Gregory, Principal Analyst, FINRA Advertising

Regulation

Timothy Holland, Manager, FINRA Advertising Regulation

Steven O'Mara, Associate Director, FINRA Advertising

Regulation

1

Panelists


The role of the Advertising Regulation Department.

The definitions, approval, review and recordkeeping

requirements in FINRA Rule 2210.

The filing requirements and filing exemptions.

The content standards of FINRA Rule 2210.

How to comply with these content standards.

2

By the end of the session, you should know:


Advertising filings review program

Complex reviews

Sweeps

Member outreach and education

Contact information

Website: www.finra.org/Advertising

Telephone number: 240-386-4500

3

FINRA Advertising Regulation Department


FINRA Rule 2210: Introduction and Definitions


Institutional communications

Flexible supervision:

– Risk-based procedures

– Training

– Surveillance

– Follow-up to correct problems

Internal use only communications used within a single broker

dealer are not subject to FINRA Rule 2210; however, each firm

must adopt procedures to supervise this area of its business.

5

Supervision of Institutional Communications


Correspondence

Flexible supervision:

– Risk-based procedures

– Training

– Surveillance

– Follow-up to correct problems

6

Supervision of Correspondence


An appropriately qualified, registered principal must approve each retail communication prior to use or filing with FINRA.

Exceptions from principal approval include:

Retail communications, supervised in the same manner as correspondence, that:

– Do not make any financial or investment recommendation or promote a product or service;

– Are posted on an online interactive electronic forum (social media);

– Are excepted from the definition of “research report” (e.g., market letters); and,

– Are filed by another firm, and found by FINRA to be consistent with standards.

7

Internal Approval of Retail Communications


Retain all communications for 3 years as required by the Securities Exchange Act of 1934 (SEA) Rule 17a-4(b).

Records for retail and institutional communications must include:

Copy of the communication and the dates of first and last use;

Name of the registered principal approving the communication;

Date of approval; and,

Information concerning the source of any statistical table, graph, or illustration.

8

Recordkeeping


Filing requirements apply only to certain retail communications used with more than 25 retail customers within 30 calendar days.

Retail communications that must be filed 10 business days prior to first use:

New member firms must file certain retail communications for one year based on their membership effective date. These include:

– Electronic or public media (i.e., any generally accessible website, newspaper, magazine, radio, television, signs and billboards.)

Registered investment company ranking that is not generally published or is the creation of the investment company.

9

Filing Requirements for Retail Communications


Retail communications that must be filed within 10 business days of first use:

Promotion or recommendation of specific registered investment companies or families:

– Mutual funds, exchange-traded funds, closed-end funds, unit investment trusts, variable annuities, and variable life insurance products;

Public direct participation programs; and,

CMOs and derivative products registered under the Securities Act of 1933.

10

Filing Requirements for Retail Communications


Institutional communications

Correspondence

Independently prepared reprints or excerpts of articles issued by unaffiliated publishers used without material change

Retail communications that do not make any financial or investment recommendation or promote a product or service

Previously filed communications not materially changed

“Laundry list” of investment products

11

Exceptions to the Filing Requirements


Statistical or non-narrative updates to previously filed templates

Templates containing non-predictive narrative information

Press releases made available only to the media

Research reports on exchange-listed securities

Interactive social media posts

Prospectuses, annual or semi-annual reports filed with the SEC

Free writing prospectuses that are not required to be filed with the SEC

12

Exceptions to the Filing Requirements


The Department also accepts voluntary filings.

Filings should be sent electronically through the Advertising Regulation Electronic Files (AREF) system.

Filing submissions should include:

Descriptive title of ad;

Name and title of the principal who approved the communication;

Date of approval;

Actual or anticipated date of first use; and,

Intended audience and use.

13

Submitting Communications to FINRA


General standards for all communications

Communications must be fair and balanced, and must provide a sound basis for evaluating the facts regarding any product or service.

Material information that would cause the communication to be misleading may not be omitted:

– For example, risks, fees, and restrictions or conditions.

False, exaggerated, unwarranted, promissory, or misleading statements or claims are prohibited.

Important or material information should not be in legends and footnotes.

14

FINRA Rule 2210 General Content Standards


General standards for all communications

Clarity and context

Nature of the audience

Communications may not predict or project performance or

imply that past performance will recur, except for:

– Hypothetical illustrations of mathematical principles, such as compound

interest, that do not predict or project performance;

– Investment analysis tools (FINRA Rule 2214); and,

– Reasonable price targets in equity research reports (FINRA Rule 2241).

15

FINRA Rule 2210 General Content Standards


Retail communications and correspondence

FINRA member name

Tax-free claims and tax-deferred compounding

Fees and expenses for open-end management investment

company performance

Testimonials

16

FINRA Rule 2210 Specific Content Standards


Retail communications

Comparisons must disclose all material differences

Recommendations: disclosure concerning conflicts of interest

BrokerCheck

All communications

Use of FINRA name and linking to the FINRA website

17

FINRA Rule 2210 Specific Content Standards


Rule covers participation in seminars, forums, radio or

TV interviews, or other unscripted speaking activities.

General content standards of FINRA Rule 2210 apply.

Associated persons must have a reasonable basis for

any recommendations and must disclose:

The nature of any more than a nominal financial interest; and,

Any other actual material conflict of interest.

18

Public Appearances


Each firm must establish appropriate procedures for the

supervision of public appearances.

Videos or audio recordings of public appearances placed on a

website must be approved by a principal prior to posting.

Any scripts, slides, handouts or other written materials used in

conjunction with public appearances must comply with all

applicable provisions.

19

Public Appearances


FINRA advertising rules 2210 – Communications With the Public

2211 – Communications With the Public About Variable Life Insurance and Variable Annuities

2212 – Use of Investment Companies Rankings in Retail Communications

2213 – Requirements for the Use of Bond Mutual Fund Volatility Ratings

2214 – Requirements for the Use of Investment Analysis Tools

2215 – Communications With the Public Regarding Security Futures

2216 – Communications With the Public About Collateralized Mortgage Obligations

2220 – Options Communications

20

Resources


FINRA advertising rules

2241 – Research Analysts and Research Reports

2242 – Debt Research Analysts and Debt Research Reports

3110 – Supervision

3160 – Networking Arrangements between Members and

Financial Institutions

21

Resources


SEC, MSRB and SIPC advertising rules enforced by FINRA

SEC Rule 482 – Advertising by an Investment Company as Satisfying Requirements of Section 10

SEC Rule 34b-1 – Sales Literature Deemed to be Misleading

SEC Rule 135A – Generic Advertising

SEC Rule 134 – Communications Not Deemed a Prospectus

SEC Rule 433 – Conditions to Permissible Post-Filing Free Writing Prospectuses

Municipal Securities Rulemaking Board (MSRB) Rule G-21 Advertising

Securities Investor Protection Corporation (SIPC) Advertising By-Law Article 10, Section 4

22

Resources


Questions and Answers

23


Advertising Compliance Boot Camp: Fundamentals of FINRA Rule 2210 Thursday, October 5 11:30 a.m. – 12:30 p.m. Resources FINRA Advertising Rules

FINRA Rule 2210. Communications With the Public

http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=10648

FINRA Rule 2211. Communications with the Public About Variable Life Insurance and Variable Annuities


FINRA Rule 2212. Use of Investment Companies Rankings in Retail Communications


FINRA Rule 2213. Requirements for the Use of Bond Mutual Fund Volatility Ratings


FINRA Rule 2214. Requirements for the Use of Investment Analysis Tools


FINRA Rule 2215. Communications With the Public Regarding Security Futures


FINRA Rule 2216. Communications With the Public About Collateralized Mortgage Obligations


FINRA Rule 2220. Options Communications


FINRA Rule 2241. Research Analysts and Research Reports

http://finra.complinet.com/en/display/display.html?rbid=2403&record_id=16474&element_id=11946&highlight=2241#r16474












FINRA Rule 2242. Debt Research Analysts and Debt Research Reports


FINRA Rule 3110. Supervision


FINRA Rule 3160. Networking Arrangements between Members and Financial Institutions


SEC, MSRB and SIPC Advertising Rules

SEC Rule 482 – Advertising by an Investment Company as Satisfying Requirements of Section 10

www.sec.gov/rules/final/33-8294.htm www.law.cornell.edu/cfr/text/17/230.482

SEC Rule 34b-1 – Sales Literature Deemed to be Misleading

www.sec.gov/rules/final/33-8294.htm www.law.cornell.edu/cfr/text/17/270.34b-1

SEC Rule 135A – Generic Advertising

www.sec.gov/rules/proposed/s71702/s71702-43.pdf www.law.cornell.edu/cfr/text/17/230.135a

SEC Rule 134 – Communications Not Deemed a Prospectus

http://finra.complinet.com/en/display/viewall_display.html?rbid=1189&element_id=1160000715 www.law.cornell.edu/cfr/text/17/230.134

SEC Rule 433 – Conditions to Permissible Post-Filing Free Writing Prospectuses

www.law.cornell.edu/cfr/text/17/230.433

Municipal Securities Rulemaking Board (MSRB) Rule G-21 Advertising

www.msrb.org/Rules-and-Interpretations/MSRB-Rules/General/Rule-G-21.aspx

Securities Investor Protection Corporation (SIPC) Advertising By-Law Article 10, Section 4

www.sipc.org/about-sipc/statute-and-rules/bylaws






https://www.sec.gov/rules/final/33-8294.htm

https://www.law.cornell.edu/cfr/text/17/230.482

https://www.sec.gov/rules/final/33-8294.htm

https://www.law.cornell.edu/cfr/text/17/270.34b-1

https://www.sec.gov/rules/proposed/s71702/s71702-43.pdf

https://www.law.cornell.edu/cfr/text/17/230.135a

http://finra.complinet.com/en/display/viewall_display.html?rbid=1189&element_id=1160000715



http://www.msrb.org/Rules-and-Interpretations/MSRB-Rules/General/Rule-G-21.aspx

https://www.sipc.org/about-sipc/statute-and-rules/bylaws


Current Trends and Topics for Investment Company Communications Thursday, October 5 11:30 a.m. – 12:30 p.m. Join FINRA staff and industry panelists as they discuss advertising compliance issues concerning registered investment companies, including mutual funds, ETFs and closed-end funds. The panel includes discussions on current trends, changes to FINRA Rule 2210 and recent regulatory interpretations, including related performance. The panelists also share tips to strengthen the marketing and compliance relationship when developing compliant communications.

Moderator: Derek Ashworth Associate Director FINRA Advertising Regulation Panelists: Darrian Hopkins Director and Compliance Officer TIAA Lynn Lawson Associate Manager FINRA Advertising Regulation Danielle Nicholson Smith Vice President and Legal Counsel - U.S. Communications and Digital Services T. Rowe Price Investments Services, Inc.

I. Introduction

II. Discussion of Advertising Review Process A. T. Rowe Price Process B. TIAA Process C. Advertising Department Process

III. Recent Regulatory Updates Affecting Investment Companies

A. Rule 2210 Amendments (Exemptions from filing requirement) B. Related Performance C. SEC – Money Market Fund Disclosure (effective October 2016) D. DOL Rule

IV. Themes in Communications – What are investment company communications discussing?

A. Common discussions (e.g., active vs. passive debate, hunt for yield, new investment strategies)

B. Concerns (e.g., comparisons, accurate descriptions, risks)


C. Product space (e.g., mutual funds, exchange-traded funds, closed-end interval funds, digital investment advice)

D. Risk Disclosure for Current Market Conditions (SEC Guidance Update, March, 2016)

V. Communication Mediums A. Successes and challenges of creating communications for different mediums

(disclosure) B. Social media parameters (how do firms determine what to use)

VI. Strengthening the Marketing, Legal and Compliance Relationship

A. T. Rowe Price – Agile process B. TIAA – Collaborative process C. FINRA – How FINRA can contribute

VII. Q&A and Wrap Up


Current Trends and Topics for Investment Company Communications Panelist Bios: Moderator: Derek Ashworth is Associate Director in FINRA’s Advertising Regulation Department. The department protects investors by ensuring broker-dealer members of FINRA use communications that are fair, balanced and not misleading. Mr. Ashworth’s primary responsibility is managing staff members dedicated to the routine review of member firm communications. Mr. Ashworth also participates in the Department’s outreach efforts including serving as a panelist in prior FINRA conferences and presenting during selected FINRA Compliance Boot Camps. He has been with the Advertising Regulation Department for 17 years. Prior to joining FINRA, Mr. Ashworth was a program manager for a business and education partnership at Nova Southeastern University in Fort Lauderdale, FL. Previous to this role, he was a specialty banker and registered representative with First Union in West Palm Beach, FL. Mr. Ashworth received his bachelor’s degree from Stetson University and completed his M.B.A. at Johns Hopkins University. Panelists: Darrian Hopkins is Director and Compliance Officer responsible for leading TIAA’s Marketing Compliance and Oversight Program. This team leads all oversight activities for TIAA’s marketing review program to ensure compliance with applicable advertising laws, rules and regulations. Mr. Hopkins joined TIAA in February 2006 from FINRA, where he was an Associate Supervisor in the Advertising Regulation Department. Mr. Hopkins spent nine and a half years in the Department and, prior to that, he spent five years with the U.S. Securities and Exchange Commission also in Washington, DC. While at FINRA, Mr. Hopkins was a frequent speaker on various panels at FINRA’s annual Advertising Regulation Conference. Mr. Hopkins is a graduate of the University of South Carolina. Lynn Lawson is an Associate Manager in FINRA’s Advertising Regulation Department. Her primary responsibilities include training and mentoring assigned staff and conducting reviews of complex communications for compliance with applicable advertising rules. She is also the Department’s Training Committee Coordinator and has been a speaker at FINRA’s Advertising Regulation Department annual conference since 2011. Prior to joining FINRA, she worked as a contract attorney and in the financial services industry. She holds Series 7, 24 and 63 registrations. Ms. Lawson is also a graduate from The Catholic University of America, Columbus School of Law and earned a B.A. in English from Spelman College. She is also holds the designation of a Certified Regulatory and Compliance Professional from the FINRA Institute at Wharton and is a member of the District of Columbia Bar. Danielle Nicholson Smith is Legal Counsel for U.S. Communications and Digital Services and Vice President of T. Rowe Price Investment Services, Inc. She joined T. Rowe Price in 1992. Most of her 25 years in the industry have been spent on the application of FINRA and SEC Advertising Rules to communications with the public. Ms. Smith oversaw the principal review and filing with FINRA of all of the firm’s mutual fund advertising and sales materials for over 15 years. She serves on the Advertising Rules Committee of the Investment Company Institute and has been a speaker on regulation of social media at the FINRA annual conference. Ms. Smith holds a bachelor’s degree from Smith College and a law degree from the University of Maryland School of Law.


Current Trends and Topics for

Investment Company Communications


Moderator

Derek Ashworth, Associate Director, FINRA Advertising Regulation

Panelists

Darrian Hopkins, Director and Compliance Officer, TIAA

Lynn Lawson, Associate Manager, FINRA Advertising Regulation

Danielle Nicholson Smith, Vice President and Legal Counsel - U.S.

Communications and Digital Services, T. Rowe Price Investments

Services, Inc.

1

Panelists


Under the “Schedule” icon on the home screen,

Select the day,

Choose the Current Trends and Topics for Investment

Company Communications session,

Click on the polling icon:

2

To Access Polling


Segment Topics

Advertising Review Process

Regulatory Updates Affecting Investment Company Communications

Trends in Investment Company Communications

Creating Communications for Different Media

Strengthening the Marketing, Legal and Compliance Relationship

Questions & Answers

3

Agenda


Understanding the Communications Review

Procedure

TIAA

T. Rowe Price Investment Services, Inc.

FINRA

4


Communication AnalysisComplies or

Needs Revisions


Tips for Filing Submissions with FINRA

Indicate if the communication is promoting a new product or represents a new marketing campaign

Explain how the communication will be used and describe necessary context

Provide supporting documents (e.g., prospectus)

Clarify if the communication will be preceded or accompanied by a prospectus

Indicate if previous versions of the communication have been filed

Identify the landing page or relevant ‘linked’ content for digital communications

5



Rule 2210 Amendments – Filing Exclusions

Investment company shareholder reports

Generic investment company communications

Templates

– Expanded to include non-predictive narrative content

Backup material for investment company performance

rankings & comparisons

6

Regulatory Updates Affecting Investment Company

Communications


1. What filing exclusion has had the most impact on

your firm’s communications?

a. Investment company shareholder reports

b. Generic investment company communications

c. Templates (expansion to include non-predictive narrative content)

d. Back-up material for investment company performance rankings &

comparisons

e. All of the above

7

Polling Question 1


Guidance for Related Performance in Institutional

Communications

Use of related performance for continuously offered closed-end

funds is permitted – consistent with conditions in June 9, 2017

Interpretive Letter

Related performance can be net of fees of the subject mutual fund

(Interpretive Guidance Question, March 9, 2017)

Related performance guidance can apply to actively managed

ETFs (Interpretive Guidance Question, March 9, 2017)

8


Communications


Money Market Fund Reforms (October, 2016)

Amendments to the disclosure statements that must appear in

money market fund communications

DOL Fiduciary Rule

Firm preparation and response

9


Communications


Themes in Discussions

Great Debate: Active or Passive Management

Hunt for Yield

Benefits of Multi-factor Strategies

Protection from Managed Volatility Strategies

10


Products

Trends

Themes


Potential Discussion Concerns

Fair and balanced comparisons

Accurate description of investment or strategy

Explanation of risks

Consideration of the audience

11


Products

Trends

Themes


Product Considerations

Closed-end funds

– Interval funds

Alternative funds

– Floating-rate loan funds

–Unconstrained bond funds

– Long/short funds

–Multi-currency funds

Digital investment advice tools

12


Products

Trends

Themes


Disclosure Practices

Consider market conditions and the impact on fund risks

Assess whether current risk disclosure is adequate

13


Products

Trends

Themes


Challenges of Responsive Web Design Technology

Web content used in other device formats (smartphones or

tablets)

Presentation of disclosure (clarity, proximity and prominence)

Considerations for Social Media Presence

Identifying audience and channel(s)

Incorporating compliance in strategy

14



Implementing Effective Practices

15

Strengthening the Marketing, Legal and Compliance

Relationship

Marketing

ComplianceLegal


2. How would you characterize the collaboration

including responsiveness between the compliance,

marketing and legal teams/staff at your firm when

creating communications?

a. Extremely responsive

b. Very responsive

c. Somewhat responsive

d. Not so responsive

e. Not at all responsive

16

Polling Question 2



Collaboration

Agility

FINRA feedback

17


Relationship

Marketing

ComplianceLegal




Questions & Answers


Current Trends and Topics for Investment Company Communications Thursday, October 5 11:30 a.m. – 12:30 p.m. Resources General Guidance (Communications With the Public) Notices

FINRA Regulatory Notice 17-18, Guidance on Social Networking Websites and Business Communications (April 2017)

www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-18.pdf

FINRA Regulatory Notice 16-41, SEC Approves Amendments to Rules Governing Communications With the Public (October 2016)


FINRA Regulatory Notice 15-50, SEC Approves Rule Requiring Members’ Websites to Include a Readily Apparent Reference and Hyperlink to BrokerCheck (December, 2015)

www.finra.org/sites/default/files/Notice_Regulatory_15-50.pdf

FINRA Regulatory Notice 15-17, Guidance on Rules Governing Communications With the Public (May 2015)

www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory_Notice_15-17.pdf

FINRA Regulatory Notice 15-16, FINRA Requests Comment on Proposed Amendments to Rules Governing Communications With the Public (May 2015)


FINRA Regulatory Notice 13-03, FINRA Provides Guidance on New Rules Governing Communications With the Public (January 2013)

www.finra.org/sites/default/files/NoticeDocument/p197615.pdf

FINRA Regulatory Notice 12-29, SEC Approves New Rules Governing Communications With the Public – Effective Date: February 4, 2013 (June 2012)


https://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-18.pdf

http://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-16-41.pdf

http://www.finra.org/sites/default/files/Notice_Regulatory_15-50.pdf

http://www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory_Notice_15-17.pdf


http://www.finra.org/sites/default/files/NoticeDocument/p197615.pdf



FINRA Regulatory Notice 11-49, Advertising Regulation: FINRA Provides Guidance on Advertising Regulation Issues (October 2011)


FINRA Regulatory Notice 11-39, Guidance on Social Networking Websites and Business Communications (August 2011)


FINRA Regulatory Notice 10-06, Guidance on Blogs and Social Networking Web Sites (January 2010)


Miscellaneous

Podcast, Communications with the Public Rule Amendments (January 9, 2017)

www.finra.org/industry/podcasts/communications-public-rule-amendments

Podcast, Communications With the Public Consolidated Rule – Part 2 (February 26, 2013)

www.finra.org/industry/podcasts/communications-public-consolidated-rule-%e2%80%93-part-2

Podcast, Communications with the Public Consolidated Rule – Part 1 (February 12, 2013)


Advertising Regulation Frequently Asked Questions (FAQ) Frequently asked questions related to advertising regulation (January 8, 2017)

www.finra.org/industry/issues/faq-advertising

FINRA Information Notice Use of FINRA Logo (January 2016)

www.finra.org/sites/default/files/notice_doc_file_ref/Information-Notice_010816.pdf

Mutual Funds Rules and Notices

FINRA Rule 2210. Interpretive Guidance Questions and Answers Provision of Related Performance (March 9, 2017)

www.finra.org/industry/finra-rule-2210-questions-and-answers

FINRA Regulatory Notice 08-82, FINRA Reminds Firms of Their Sales Practice Obligations with Regard to Cash Alternatives (December 2008)


FINRA Regulatory Notice 08-81, FINRA Reminds Firms of Their Sales Practice Obligations with Regard to the Sale of Securities in a High Yield Environment (December 2008)



https://www.finra.org/sites/default/files/NoticeDocument/p124186.pdf


http://www.finra.org/industry/podcasts/communications-public-rule-amendments

http://www.finra.org/industry/podcasts/communications-public-consolidated-rule-%e2%80%93-part-2


http://www.finra.org/industry/issues/faq-advertising

http://www.finra.org/sites/default/files/notice_doc_file_ref/Information-Notice_010816.pdf

http://www.finra.org/industry/finra-rule-2210-questions-and-answers




NASD Notice to Members 06-48, SEC Approves Amendments to NASD Rules 2210 and 2211 to Require Disclosure of Fees and Expenses in Mutual Fund Performance Sales Material (September 2006)


NASD Notice to Members 06-05, SEC Approves Permanent Rules Concerning Bond Mutual Fund Volatility Ratings – Effective Date: December 27, 2005 (January 2006)


NASD Notice to Members 04-86, Investment Analysis Tools (November 2004)


NASD Notice to Members 00-21, NASD Regulation Reminds Members of Their Responsibilities When Advertising Recent Mutual Fund Performance (April 2000)


NASD Notice to Members 98-107, NASD Reminds Members Of Their Obligations To Disclose Mutual Fund Fees (December 1998)


Miscellaneous

SEC Guidance Update, Fund Disclosure Reflecting Risks Related to Current Market Conditions No. 2016-02 (March 2016)

www.sec.gov/investment/im-guidance-2016-02.pdf

FINRA Interpretive Letter, The use of related performance information in institutional communications, subject to specific conditions, is consistent with the applicable standards of FINRA Rule 2210. (May, 2015)

www.finra.org/industry/interpretive-letters/may-12-2015-1200am

Podcast, Cash Alternatives (March 16, 2009)

www.finra.org/industry/podcasts/cash-alternatives

Regulatory & Compliance Alert, Inaccurate Performance Graphs Result in Formal Action (Summer 2000), Page 9

www.finra.org/sites/default/files/RCA/p002377.pdf

Regulatory & Compliance Alert, Sudden Performance Changes May Require More Information (Summer 1999), Page 16


Investor Alerts

Investor Alert, Updated: Duration—What an Interest Rate Hike Could Do to Your Bond Portfolio (March 6, 2017)

www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio






https://www.sec.gov/investment/im-guidance-2016-02.pdf

http://www.finra.org/industry/interpretive-letters/may-12-2015-1200am

http://www.finra.org/industry/podcasts/cash-alternatives

http://www.finra.org/sites/default/files/RCA/p002377.pdf


http://www.finra.org/investors/alerts/duration-what-interest-rate-hike-could-do-your-bond-portfolio


Investor Alert, Frontier Funds – Travel with Care (Last Updated: September 11, 2014)

www.finra.org/investors/alerts/frontier-funds

Investor Alert, Alternative Funds Are Not Your Typical Mutual Funds (Last Updated: June 11, 2013)

www.finra.org/investors/alerts/alternative-funds-are-not-your-typical-mutual-funds

Investor Alert, Duration – What an Interest Rate Hike Could Do to Your Bond Portfolio (Last Updated: February 14, 2013)


Investor Alert, The Grass Isn’t Always Greener—Chasing Return in a Challenging Investment Environment (Last Updated: November 16, 2011)

www.finra.org/investors/alerts/grass-isnt-always-greener

Investor Alert, Class B Mutual Fund Shares: Do They Make the Grade? (Last Updated: October 11, 2008)

www.finra.org/investors/alerts/class-b-mutual-fund-shares-do-they-make-grade

Investor Alert, Understanding Mutual Fund Classes (Last Updated October 6, 2008)

www.finra.org/investors/alerts/understanding-mutual-fund-classes

Investor Alert, Funds of Hedge Funds – Higher Costs and Risks for Higher Potential Returns (Last Updated: October 6, 2008)

www.finra.org/investors/alerts/funds-hedge-funds-higher-costs-and-risks-higher-potential-returns

Investor Alert, Mutual Fund Breakpoints: Are You Owed a Refund? (Last Updated: November 3, 2003)

www.finra.org/investors/alerts/mutual-fund-breakpoints-are-you-owed-refund

Investor Alert, Principal-Protected Funds – Security Has a Price (Last Updated: March 27, 2003)

www.finra.org/investors/alerts/principal-protected-funds-security-has-a-price

Investor Alert, Mutual Fund Breakpoints: A Break Worth Taking (Last Updated: January 14, 2003)

www.finra.org/investors/alerts/mutual-fund-breakpoints-break-worth-taking

Exchange-Traded Funds Rules and Notices



FINRA Regulatory Notice 09-31, FINRA Reminds Firms of Sales Practice Obligations Relating to Leveraged and Inverse Exchange-Traded Funds (June 2009)


http://www.finra.org/investors/alerts/frontier-funds

http://www.finra.org/investors/alerts/alternative-funds-are-not-your-typical-mutual-funds


http://www.finra.org/investors/alerts/grass-isnt-always-greener

http://www.finra.org/investors/alerts/class-b-mutual-fund-shares-do-they-make-grade

http://www.finra.org/investors/alerts/understanding-mutual-fund-classes

http://www.finra.org/investors/alerts/funds-hedge-funds-higher-costs-and-risks-higher-potential-returns

http://www.finra.org/investors/alerts/mutual-fund-breakpoints-are-you-owed-refund

http://www.finra.org/investors/alerts/principal-protected-funds-security-has-a-price

http://www.finra.org/investors/alerts/mutual-fund-breakpoints-break-worth-taking




Miscellaneous

FINRA Interpretive Letter, Additional Guidance Regarding the Use of Pre-Inception Index Performance in Institutional Communications (April 22, 2013)

www.finra.org/industry/interpretive-letters/april-22-2013-1200am

SEC Fast Answers, Exchange-Traded Funds (ETFs) (Modified: November 8, 2013)

www.sec.gov/fast-answers/answersetfhtm.html

Podcast, Non-Traditional Exchange-Traded Funds (July 13, 2009)

www.finra.org/industry/podcasts/non-traditional-exchange-traded-funds

FINRA Guidance, Non-Traditional ETFs Frequently Asked Questions

www.finra.org/industry/non-traditional-etf-faq News / Alerts

Investor Bulletin: Exchange-Traded Funds (ETFs) (August 10, 2012)

https://investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-exchange-traded-funds-etfs

Investor Alert, Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors (Last Updated: August 18, 2009)

www.finra.org/investors/alerts/leveraged-and-inverse-etfs-specialized-products-extra-risks-buy-and-hold-investors

News Release, FINRA, SEC Warn Retail Investors About Investing in Leveraged or Inverse ETFs (August 18, 2009) www.finra.org/newsroom/2009/finra-sec-warn-retail-investors-about-investing-leveraged-or-inverse-etfs

Regulatory & Compliance Alert, Exchange-Traded Fund Performance (Fall 2001), Pages 12 & 13


Closed-End Funds

FINRA Interpretive Letter A member firm may include related performance information in institutional communications concerning continuously offered closed-end funds, subject to the stated conditions discussed in the letter. (June, 2017)

www.finra.org/industry/interpretive-letters/june-12-2017-1200am

Investment Company Institute, Frequently Asked Questions About Closed-End Funds and Their Use of Leverage (May 2017)

www.ici.org/cef/background/faqs_closed_end

Investment Company Institute, A Guide to Closed-End Funds (May 2017)

www.ici.org/cef/background/bro_g2_ce

http://www.finra.org/industry/interpretive-letters/april-22-2013-1200am

https://www.sec.gov/fast-answers/answersetfhtm.html

http://www.finra.org/industry/podcasts/non-traditional-exchange-traded-funds

http://www.finra.org/industry/non-traditional-etf-faq



http://www.finra.org/investors/alerts/leveraged-and-inverse-etfs-specialized-products-extra-risks-buy-and-hold-investors


http://www.finra.org/newsroom/2009/finra-sec-warn-retail-investors-about-investing-leveraged-or-inverse-etfs




https://www.ici.org/cef/background/faqs_closed_end

https://www.ici.org/cef/background/bro_g2_ce


SEC Fast Answers, Closed-End Fund Information (Modified: January 16, 2013)

www.sec.gov/fast-answers/answersmfclosehtm.html

NASD Notice to Members 03-07, NASD Reminds Members of Obligations When Selling Hedge Funds (February 2003)


https://www.sec.gov/fast-answers/answersmfclosehtm.html



JOBS Act Implementation Thursday, October 5 11:30 a.m. – 12:30 p.m.

This session focusses on business and regulatory developments related to the JOBS Act, including recent innovations around how firms conduct business online. FINRA and industry experts discuss how firms can stay in compliance as they conduct public and private offerings under the new rules. Moderator: Ira Gluck Associate Director FINRA Advertising Regulation Panelists: Joan Adler Partner Ellenoff Grossman & Schole LLP Rebecca Knutson Senior Principal Analyst FINRA Advertising Regulation Alissa (Lisa) Robinson Director FINRA Membership Application Program

I. Introductions and Overview of JOBS Act A. Crowdfunding B. Title II C. Title IV D. Title III

II. Regulation Crowdfunding and Title III Offerings

A. Statistics B. Application Process C. Surveillance and Exam Process D. Common Issues and Findings E. Industry Perspective

III. Platforms

A. Statistics B. Private Placement Platform Surveillance Program and Findings C. Ad Reg Interpretive Positions D. Integrated Platforms that offer multiple offering types and through different entities E. Industry Perspective


IV. Emerging Developments A. Mobile Applications B. Unified Offerings

V. Wrap-up and Questions


JOBS Act Implementation Panelist Bios: Moderator: Ira Gluck is Associate Director in FINRA’s Advertising Regulation Department. In this role, he works on policy issues and matters involving complex products and novel regulatory concerns. Mr. Gluck’s previous positions within FINRA included leading the Emerging Regulatory Issues team within the Risk and Strategy Department, as well as heading the Strategic Initiatives Group in FINRA’s Enforcement Department. He also served in various investigative and management roles in the Enforcement and Member Regulation Departments of NASD before its 2007 consolidation with NYSE Member Regulation, which resulted in the formation of FINRA. Mr. Gluck received his bachelor’s degree from the University of Pennsylvania and completed both a master’s degree and M.B.A. at the University of California, Irvine. Panelists: Joan Adler is a partner at Ellenoff Grossman & Schole LLP and she specializes in broker dealer regulation and blue sky compliance. Ms. Adler’s broker dealer practice encompasses FINRA membership applications for broker-dealers and funding portals and a wide range of compliance issues. Ms. Adler also works with public and private companies and underwriters and placement agents on state law registration and exemptions for a variety of public and private offerings. In addition, she has advised investment advisors on exemptions at both the federal and state levels. As a core member of Ellenoff Grossman & Schole’s crowdfunding team, she has been on the forefront of the JOBS Act initiatives guiding all market participants. Ms. Adler has participated on several FINRA panels related to membership and corporate financing issues and has worked proactively with the SEC, FINRA and state regulators to establish guidelines for the JOBS Act initiatives, particularly in regard to funding platforms and portals. Rebecca Knutson is the senior principal analyst in FINRA’s Advertising Regulation Department. She came to NASD/FINRA in 1998 after spending more than a dozen years with a regional broker dealer, Johnston, Lemon & Co. Incorporated, as a registered representative and member of the firm’s municipal trading desk. Ms. Knutson is a CPA, and has an MBA from Johns Hopkins University, with a concentration in information systems management. Lisa Robinson serves as Director of the Membership Application Program (MAP) group at FINRA where she interacts with industry professionals on a wide range of topics including unique, novel, and/or complex products, platforms, large scale restructuring and other material changes in business operations. She offers insight to both internal and external constituents and provides practical solutions to business needs. In addition, Ms. Robinson directs the review of applications submitted by SEC-registered funding portals seeking FINRA membership pursuant to the crowdfunding provisions of Title III of the JOBS Act and SEC’s Regulation Crowdfunding. She also oversees FINRA’s funding portal surveillance and examination program. She often liaises with various regulatory agencies on issues related to Regulation Crowdfunding, and the requirements contained therein, impacting proposed and existing funding portals. Prior to joining MAP, Ms. Robinson was an Associate Director in FINRA’s Member Regulation, Sales Practice Department, where she was responsible for the oversight and execution of the District 10 examination plan, including cycle, cause and branch examinations, for many member firms. She has participated on several FINRA initiatives, most recently FINRA’s Retrospective Review of the MAP rules. She proposed and now administers MAP’s “Triage/Fast track” program, which takes a risk-based approach to processing full FINRA member applications. Ms. Robinson has served as a panelist at numerous industry events on topics such as crowdfunding, examinations, supervisory controls, and ethics. Before joining FINRA, Ms. Robinson worked at a large mutual fund company. She is a Certified Regulatory and Compliance Professional™ (CRCP™) and holds a bachelor’s degree from Nova Southeastern University.


JOBS Act Implementation


Panelists

Moderator Ira Gluck, Associate Director, FINRA Advertising Regulation

Panelists Joan Adler, Partner, Ellenoff Grossman & Schole LLPRebecca Knutson, Senior Principal Analyst, FINRA Advertising

RegulationAlissa (Lisa) Robinson, Director, FINRA Membership

Application Program


Under the “Schedule” icon on the home screen,Select the day,Choose the JOBS Act Implementation session, Click on the polling icon:

2

To Access Polling


1. Describe your firma. Funding portalb. Broker-dealerc. Both funding portal and broker-dealerd. None of the above

3

Polling Question 1


2. Has your firm engaged in an online Regulation D offering?

a. Yesb. No

4

Polling Question 2


3. Has your firm engaged in an online Regulation A offering?

a. Yesb. No

5

Polling Question 3


4. Has your firm engaged in a Regulation Crowdfunding offering?

a. Yesb. No

6

Polling Question 4


5. Have you personally participated in a crowdfunded endeavor? (Donation or Investment)

a. Yesb. No

7

Polling Question 5


CrowdfundingTitle II – Regulation D, Rule 506(c) No dollar limit on offering size or investment amountGeneral solicitationOnly accredited investors – verified or reasonable basis for

confirming status No mandated pre-sale or ongoing disclosures Any company eligible Restricted securities No bad actors

8

Overview of the JOBS Act


Title IV – Regulation A+ Two Tiers

– $20 million annual limit for Tier 1– $50 million annual limit for Tier 2 (audited financials required)

General solicitation Test the waters material permitted All investors may purchase subject to certain investment limits Offering circular with required disclosure US and Canadian issuers No SPVs, investment companies, or blank check offerings Freely tradable securities

9



Title III – Regulation Crowdfunding $1,070,000 annual limit Limits on investment based on income and net worth Must be sold through a registered intermediary Offering materials must reside on intermediary website All investors may purchase Form C with required disclosure Annual disclosure Only US issuers No SPVs, investment companies, or blank check offerings Limited resale for 1 year

10



Statistics Form C filed with the SECApplications filed with FINRAApproved FP membersPending FP-NMA’sExisting BD’s

11

Regulation Crowdfunding and Title III Offerings


Application Process Application Process for FP Members only

– FINRA Regulatory Notice 16-06, Jumpstart Our Business Startups (JOBS) Act Form FP-NMA Standards of Admission Timeframes

– Membership Interview Demo of website

Application Process for Registered BD’s– FINRA Regulatory Notice 16-07, Jumpstart Our Business Startups (JOBS) Act Notification via Firm Gateway vs 1017 Notification

12



Surveillance and Exam ProcessPoint of ContactMonitor websiteReview of 300(c) filings Inspections

– Tailored examination content– On site and off site examinations– Similar process to existing full broker dealer member examination

13



Common Issues and FindingsCommunications with the public Sharing platforms Valuations, Financial informationOff platform transactions Investor education

14



Industry PerspectiveWebsite must comply with Regulation Crowdfunding

requirementsWebsite is core feature of membership approval processBe mindful that target audience includes unaccredited

investors – emphasize education and risk warnings Focus on education, transparency, clarity and ease of

navigation

15



BackgroundPrivate Placement (Title II)

– Prohibition on General Solicitations

Reg A (Title IV)

FINRA Filing RequirementsAdvertisingCorporate Financing

Statistics

16

Platforms


Advertising Regulation Platform ProjectGoals Process Statistics

Common Issues and Findings False or misleading statements. Problematic use of issuer financial forecasts, investor return

projections, IRR. Need for clear and prominent risk disclosure.

17

Private Placement (Title II) Platforms


6. Does your firm’s website also include deals offered through a non-FINRA registered affiliate?

a. Yesb. No

18

Polling Question 6


Integrated Platforms Import for site to feature info about each deal type and investor

eligibility for investment in each deal typeVisual clarity for each deal typeProminent risk of loss languageUtilize hyperlinks to available SEC guidanceCustomer onboarding

19

Platforms


Unified OfferingsPlatforms that provide the ability to “seamlessly” move from a

fully subscribed Title III offering to an follow-on Regulation D or Regulation A offering

Mobile Applications Funding PortalsBD PlatformsSocial Media aspects

20

Emerging Developments


Questions


JOBS Act Implementation Thursday, October 5 11:30 a.m. – 12:30 p.m. Resources Title II – Rule 506(c)

Final Rule, Eliminating the Prohibition Against General Solicitation and General Advertising in

Rule 506 and Rule 144A Offerings (July 2013)

www.sec.gov/rules/final/2013/33-9415.pdf

Fact Sheet, Eliminating the Prohibition on General Solicitation and General Advertising in Certain Offerings (July 2013)

www.sec.gov/news/press/2013/2013-124-item1.htm

SEC Division of Corporation Finance, Eliminating the Prohibition Against General Solicitation

and General Advertising in Rule 506 and Rule 144A Offerings - A Small Entity Compliance Guide (September 2013)

www.sec.gov/info/smallbus/secg/general-solicitation-small-entity-compliance-guide.htm

SEC Division of Corporation Finance, Securities Act Rules - Compliance and Disclosure

Interpretations (April 2017)

www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm

Title IV – Regulation A

Final Rule, Amendments for Small and Additional Issues Exemptions under the Securities Act -- Regulation A (March 2015)


Fact Sheet, Regulation A+ (March 2015)

www.sec.gov/news/pressrelease/2015-49.html

Investor Bulletin, Regulation A (July 2015)

www.sec.gov/oiea/investor-alerts-bulletins/ib_regulationa.html

https://www.sec.gov/rules/final/2013/33-9415.pdf

https://www.sec.gov/news/press/2013/2013-124-item1.htm

https://www.sec.gov/info/smallbus/secg/general-solicitation-small-entity-compliance-guide.htm

https://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm


https://www.sec.gov/news/pressrelease/2015-49.html

https://www.sec.gov/oiea/investor-alerts-bulletins/ib_regulationa.html


FINRA Regulatory Notice 15-32, Regulation A Offerings (September 2015)


SEC Division of Corporation Finance, Amendments to Regulation A: A Small Entity Compliance Guide (May 2016)

www.sec.gov/info/smallbus/secg/regulation-a-amendments-secg.shtml

Title III – Regulation Crowdfunding

Final Rule, Regulation Crowdfunding (October 2015)


Fact Sheet, Regulation Crowdfunding (October 2015)

www.sec.gov/news/pressrelease/2015-249.html

FINRA Regulatory Notice 16-07, Notification to FINRA in Connection with the JOBS Act (January 2016)

www.finra.org/sites/default/files/Regulatory-Notice-16-07.pdf

SEC Division of Trading and Markets, Regulation Crowdfunding: A Small Entity Compliance Guide for Crowdfunding Intermediaries (May 2016)

www.sec.gov/divisions/marketreg/tmcompliance/cfintermediaryguide.htm

Investor Bulletin, Be Cautious of SAFEs in Crowdfunding (May 2017)

www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-be-cautious-safes-crowdfunding

Investor Alert, Crowdfunding and JOBS Act: What Investors Should Know (May 2017)

www.finra.org/investors/alerts/crowdfunding-and-jobs-act-what-investors-should-know

Funding Portals

FINRA Regulatory Notice 16-06,Funding Portal Rules (January 2016)


SEC Division of Trading and Markets, Registration of Funding Portals (January 2017)

www.sec.gov/divisions/marketreg/tmcompliance/fpregistrationguide.htm FINRA, Funding Portals We Regulate

www.finra.org/about/funding-portals-we-regulate


https://www.sec.gov/info/smallbus/secg/regulation-a-amendments-secg.shtml


https://www.sec.gov/news/pressrelease/2015-249.html

https://www.finra.org/sites/default/files/Regulatory-Notice-16-07.pdf

https://www.sec.gov/divisions/marketreg/tmcompliance/cfintermediaryguide.htm

https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-be-cautious-safes-crowdfunding

https://www.investor.gov/additional-resources/news-alerts/alerts-bulletins/investor-bulletin-be-cautious-safes-crowdfunding

http://www.finra.org/investors/alerts/crowdfunding-and-jobs-act-what-investors-should-know

http://www.finra.org/sites/default/files/Regulatory-Notice-16-06.pdf

https://www.sec.gov/divisions/marketreg/tmcompliance/fpregistrationguide.htm

http://www.finra.org/about/funding-portals-we-regulate


Advertising Compliance Boot Camp: Selected Topics Thursday, October 5 1:45 p.m. – 2:45 p.m. Designed for new compliance and marketing professionals, FINRA panelists provide insights into the core concepts of social media and digital communications, as well as the basic requirements and frequently raised regulatory compliance questions with respect to communications concerning mutual funds, ETFs and variable insurance products. The panel also features sample advertisements and important do’s and don’ts. Moderator: Pramit Das Associate Director - Technology FINRA Advertising Regulation Panelists: Steven Choi Associate Principal Advertising Analyst FINRA Advertising Regulation Joseph George Associate Director FINRA Advertising Regulation Wayne Louviere Manager FINRA Advertising Regulation

I. Introduction

II. Ad review

III. SEC Rules for Investment Company Communications A. Prospectus offer and money market legends; B. Performance standards; and C. Presentation guidelines. D. Examples of communications.

IV. Variable Insurance Products

A. Performance standards; B. Applicable rules; C. Variable annuity “do’s” and “don’ts;” D. Variable life insurance “do’s” and “don’ts;” and E. Hypothetical illustrations

V. Communications Concerning Options


VI. Investment Company Rankings

VII. Investment Analysis Tools

A. Overview; and B. Disclosure

VIII. Social Media and Digital Communications

A. Personal versus business use; B. Static versus interactive communications; C. Adoption and entanglement; and D. Applicable FINRA Regulatory Notices

IX. Q&A and Wrap-up


Advertising Compliance Boot Camp: Selected Topics Panelist Bios: Moderator: Pramit Das is Associate Director-Technology of FINRA’s Advertising Regulation Department. In this role, his responsibilities include managing a filings review group; assisting with administration of the filings review program; developing and maintaining the department’s technology needs; providing education to members, FINRA staff and other regulatory staff; and participating in certain rule amendment and rulemaking projects as necessary. He served in the same role at NASD before its 2007 consolidation with NYSE Member Regulation. Prior to joining NASD in 1994, Mr. Das worked for Metropolitan Life Insurance Company and Arthur Andersen & Co. He holds an MBA in Finance from the University of Maryland, College Park, and an MA in Financial Economics from Clemson University, Clemson, South Carolina. He was also Series 7 and 63 registered. Panelists: Steven Choi is Associate Principal Analyst in FINRA’s Advertising Regulation Department. Prior to joining FINRA/NASD in 2006, he worked in the Private Client Management Group at Legg Mason, and as a Financial Advisor in the Global Private Client Group at Merrill Lynch. Mr. Choi holds a bachelor’s degree in Art History from Williams College. Joseph George is Associate Director in FINRA’s Advertising Regulation Department, where he supervises analysts who review communications with the public for compliance with applicable rules. He has been with the department for more than 20 years and has spoken on panels at Advertising Regulation Department Conferences over the past 15 years. Prior to joining FINRA, he worked for New York Life as a registered representative and was a project manager with Computer Sciences Corporation. Mr. George holds a bachelor’s degree in economics from the University of Maryland. Wayne L. Louviere is a manager in the FINRA Advertising Regulation Department, and supervises the activity of a group of analysts that review sales communications filed by member firms. Mr. Louviere joined the Advertising Regulation Department in 2000. Prior to that time, he was a registered representative, after having served 20 years in the U.S. Navy. Mr. Louviere has a bachelor’s degree in business management – finance and a master’s of business administration from the University of Maryland.


Advertising Compliance Boot Camp:

Selected Topics


Moderator

Pramit Das, Associate Director-Technology, FINRA Advertising

Regulation

Panelists

Steven Choi, Associate Principal Advertising Analyst, FINRA

Advertising Regulation

Joseph George, Associate Director, FINRA Advertising

Regulation

Wayne Louviere, Manager, FINRA Advertising Regulation

1

Panelists


Examples of FINRA Rule 2210 content violations

Applicable SEC Rules (disclosures and performance standards)

Standards applicable to variable insurance products

Guidance pertaining to options communications

Presentation of investment company rankings

Key points regarding investment analysis tools

Core concepts of social media and digital communications

2

Agenda


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information about the Fund. Read the prospectus carefully before investing.

It is important that you carefully read the agreements and disclosures that Rocket Technology provides to you about products offered. While Rocket

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clarification. Investing in a single-sector mutual fund involves greater risk than investing in a more diversified fund. The fund may invest up to 35% of

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Rocket Fund Distributors Member FINRA

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Promissory claim

Exaggerated,

promissory assertions

Lacking basis,

balance, clarity

Placement of risk disclosure in legend inhibits understanding

Promissory claim

Unwarranted

Exaggerated claim


SEC Rule 482 governs communications used prior to delivery of the prospectus.

SEC Rule 34b-1 governs communications used after delivery of the prospectus.

SEC Rule 135a applies to generic communications about investment company securities and therefore, may not refer to a particular fund or security. Such communications may:

describe services/benefits offered by a sponsor/complex;

include details about the distributor; and

invite readers to request further information.

4

SEC Rules – Investment Company Communications


Prospectus offer – Include all four elements

Advise investors to consider objectives, risk, and charges and expenses carefully.

Explain that the prospectus or summary prospectus contains this and other information about the investment company.

Identify a source for obtaining the prospectus.

Inform investors to carefully read the prospectus before investing.

Money market legend

For each money market fund named, include the appropriate legend.

Each legend must be clearly associated with the fund to which it applies.

5

SEC Rule 482 Disclosures


Investors should carefully consider the fund’s investment objectives, risks,

charges and expenses. Contact Maize Funds Dist. (800-222-12234) or visit

www.maize.com/prospectus for a prospectus containing this and other

information about the fund. Read it carefully before investing.

Fund Name Overview

Maize Institutional Money Fund* Seeks to obtain as high a level of current income as is consistent with the preservation of principal and liquidity

within the limitations prescribed for the fund.

Government Maize Money Market Fund ** Seeks as high a level of current income as is consistent with preservation of capital and liquidity.

A Maize Growth Fund Seeks growth of capital over the long term. Normally investing in common stocks of well-known and established

companies.

International Maize ETF The ETF seeks to track the investment results of the MSCI ACWI ex USA IMI index composed of large-, mid-

and small-capitalization non-U.S. equities.

Small Maize Fund Seeks capital appreciation. Investing in small market capitalizations companies that Maize believes have above-

average growth potential

* You could lose money by investing in the Fund. Because the share price of the Fund will fluctuate, when you sell your shares they may be

worth more or less than what you originally paid for them. The Fund may impose a fee upon sale of your shares or may temporarily suspend

your ability to sell shares if the Fund's liquidity falls below required minimums because of market conditions or other factors. An investment in

the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The Fund's sponsor has

no legal obligation to provide financial support to the Fund, and you should not expect that the sponsor will provide financial support to the Fund

at any time.

** You could lose money by investing in the Fund. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it

cannot guarantee it will do so. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any

other government agency. The Fund's sponsor has no legal obligation to provide financial support to the Fund, and you should not expect that

the sponsor will provide financial support to the Fund at any time. Distributed by Maize Securities LLC. Member SIPC

Maize Funds have cultivated five fields of investment options that have the potential to provide a diversified harvest for every investor.

6


Performance – Eight elements Performance data represents past performance;

Past performance does not guarantee future results;

Current performance may be lower or higher than performance data quoted;

Investment return and principal value will fluctuate;

When redeemed, shares may be worth more or less than their original cost;

Identify a source to obtain performance current to the most recent month-end;

Disclose, as applicable, maximum amount of sales load or other nonrecurring fee; and

If load or fee not reflected, load or fee would reduce performance.

Note: Requirements for Expense Ratio – FINRA Rule 2210(d)(5)

7



Presentation standards

Five requirements:

– Legibility

– Type size

– Type style

– Prominence

– Proximity (only for performance disclosures)

Specialized disclosure requirements for electronic media,

radio, or television advertisements

8



Performance standards

Non-money market funds:

– Current yield

– Taxable-equivalent yield

– Average annual total return (1-, 5-, and 10-year or since inception periods and current to most recent calendar quarter ended)

– After-tax return

– Other performance measures must reflect all elements of return

Money market funds:

– Current yield

– Total return

9

SEC Rule 482 Performance


Applies to material preceded or accompanied by a current prospectus

Standards are consistent with those of SEC Rule 482

Performance

Performance disclosure

Presentation standards

For money market funds, include the applicable money market fund disclosure

May include non-standardized yield

10

SEC Rule 34b-1


Objective

The Fund seeks total return.

Benefit

Provides international diversification to the stock portion of an investor’s portfolio.

Total Returns as of 9/30/2017

Share Class 1 Year 5 Year 10 Year Since Inception

A (without sales charges) 14.28% 8.07% 3.99% 5.93%

A (with 5.5% sales charges) 8.00% 6.85% 3.40% 5.48%

TDG International Index 6.40% 7.80% 4.50%

Performance data shown represents past performance and is no guarantee of future results.

Investment return and principal value will fluctuate so that an investor’s shares, when redeemed,

may be worth more or less than their original cost. Current performance may be lower or higher

than that quoted. To view current to the most recent month-end performance, visit

LouviereFunds.com.

Expense Ratio1 : Gross - 2.00% Net - 1.25%

1The Advisor has contractually waived a portion of their fees/expenses until 12/31/2020. Performance would have been lower if

waivers did not apply.

Fund Fact Sheet


Objective

The Fund seeks to track the investment results

of the DKJG U.S. Healthcare 100 Index.

Benefit

Provides sector diversification to the U.S. stock

portion of an investor’s portfolio.

Total Returns as of 9/30/2017

1 Year 5 Year 10 Year Since Inception

NAV Return -2.31% 9.03% 8.95% 10.01%

Market Return -2.57% 8.78% 8.68% 9.87%

DKJG Healthcare 100 Index -3.28% 9.16% 8.12%

Expense Ratio: 0.084%

NAV Return represents the closing price of underlying securities.

Market Return is calculated using the price which investors buy and sell ETF shares in the market. The market returns in

the table are based upon the midpoint of the bid/ask spread at 4:00pm EST, and do not represent the returns you would

received if you traded shares at other times.

Performance data shown represents past performance and is no guarantee of future results.

Investment return and principal value will fluctuate so that an investor’s shares, when redeemed,

may be worth more or less than their original cost. Current performance may be lower or higher

than that quoted. To view current to the most recent month-end performance, visit

GeorgeFunds.com.

Fund Fact Sheet


Performance SEC Rule 482 performance standards do not apply.

FINRA Rule 2210 applies:

– Identify what types of fees and expenses apply to the fund.

– Disclose which fees and expenses have been deducted and which have not been deducted.

– If any fees have not been deducted, disclose that had they been deducted, the performance would have been lower.

Distribution rates Disclose how the rate was calculated.

Affirmatively disclose whether the rate reflects return of principal or other non-income sources.

13

Closed-End Funds


Contract Inception: March 1, 2013Separate Account Established: January 12, 2005

Average Annual Total Returns Through September 30, 2017(performance reflects maximum contingent deferred sales charge)

Performance returns reflect an initial contract value of $1,000. The performance data quoted represents past performance of the Sub-Accounts. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worthmore or less than original cost. For performance information current to the most recent month end, please call 1-800-888-8888. Past performance does not guarantee future results. Current performance may be lower or higher than the performance data quoted.Performance displayed is net of annual administrative, investment management, and mortality and expenses fees, as well as a declining contingent deferred sales charge (CDSC) of 8%, 7%, 6%, 5%, 4%, 3%, 2%, 1%, 0% over 9 years. The underlying Fund may incur a $30 per year annual contract charge. Please see the latest prospectus for detailed information on fees and charges.There is a 10% federal penalty tax on certain withdrawals of earnings prior to age 59 ½. Earnings are subject to ordinary income tax upon withdrawal.*Since inception returns are provided for portfolios that do not have at least 10 years of performance history as of the date they were included in the separate account.

Choi Securities LLC, Member FINRA14

Investment Option Name

Added to

Separate

Account1-year 5-year 10-year Since Inception*

Large Cap Growth 1/12/2005 6.56% -3.30% -7.02% -

Mid Cap Growth 12/31/2008 10.03% -1.82% - -7.84%

Int’l Growth 12/31/2008 3.73% 1.08% - -0.73%

Small Cap Growth 5/2/2014 15.25% - - 3.51%


SEC Rule 482 performance standards apply. Average annual total returns.

Current to the most recent calendar quarter ended.

Must be net of all recurring fees and expenses (e.g., mortality and expense risk charges, annual administrative fees, expenses of the investment options). Annual contract charges can be deducted as a percentage of the average

issued contract value.

Must be net of all non-recurring fees (e.g., sales loads and contingent deferred sales charges).

Keyed off the inception date of the separate account, even if it predates the date of the inception of the contract.

15

Variable Annuity – Historical Performance


Typically appears in material preceded or accompanied by a current prospectus for the VLI contract and its underlying accounts.

Performance standards of SEC Rule 34b-1 do not apply.

General standards of FINRA Rule 2210 do apply

Performance must reflect, at a minimum, the deduction of all fees and charges applicable at the investment option level.

Identify the fees and charges deducted; identify the fees and charges not deducted; and disclose that the performance would have been significantly lower if all fees and charges had been deducted.

If applicable, include a statement suggesting that investors obtain a personalized performance illustration.

16

Variable Life Insurance – Historical Performance


FINRA Rule 2210

FINRA Rule 2211 (Communications With the Public about Variable Life Insurance and Variable Annuities)

FINRA Rule 2212 (Use of Investment Companies Rankings in Retail Communications)

FINRA Rule 2214 (Requirements for the Use of Investment Analysis Tools)

SEC Rule 482

SEC Rule 34b-1

SEC Rule 135a

17

Variable Insurance Products – Applicable Rules


Identify the product being offered as a variable annuity.

Address risks, fees, tax liabilities, and potential penalties, as needed.

Disclose the long-term nature of a variable annuity.

Discuss riders in a fair and balanced manner, clearly explain how they work,

and adequately address fees and charges.

Ensure material promoting a rider provides a sound basis to evaluate the VA.

Explain the limitations of any guarantees mentioned and indicate that they

are based on the claims-paying ability of the issuing company.

Reference both the VA contract prospectus and the underlying funds

prospectuses, as appropriate, within the prospectus offering statements.

18

Variable Annuity Communications – Do’s


Promote a VA based solely on a specific feature like a rider or bonus credit.

Imply that a VA is liquid or appropriate for a short-term investment.

Represent that a VA’s investment options are mutual funds.

Imply that the issuer’s ratings apply to the investment options.

Highlight the fixed account’s current rate of return in lieu of a complete discussion of the VA’s investment options.

19

Variable Annuity Communications – Don’ts


Identify the product as variable life insurance.

Balance any discussion of VLI investment features with a discussion of the

insurance component.

Balance a discussion of benefits with a discussion of costs and risks.

Accompany discussions of guarantees with disclosure that they are subject

to the claims-paying ability of the issuing life insurance company.

Ensure comparisons to other products are fair, balanced, and complete.

Reference both the VLI policy prospectus and the underlying funds

prospectuses, as appropriate, within the prospectus offering statements.

Accompany discussions regarding access to investment values with an

explanation of the negative impact of loans and withdrawals.

20

Variable Life Insurance Communications – Do’s


Imply that VLI is liquid or appropriate for short-term investment.

Overemphasize the growth potential of VLI policies and the income that can be generated from such contracts.

Represent that a VLI’s investment options are mutual funds.

Imply that the issuer’s rating applies to the performance of the underlying investment options.

Highlight the fixed account’s rate of return in lieu of a complete discussion of all investment options.

Promote riders without providing a sound basis to evaluate the VLI policy.

21

Variable Life Insurance Communications – Don’ts


Disclose prominently that the illustration is hypothetical, is intended to show how

the performance of underlying investment accounts could affect the policy cash

value and death benefit, and does not predict or project future performance.

Use an assumed gross rate of return (maximum 12%) that is reasonable in light of

market conditions; must disclose both the gross and the resulting net rates used.

Include an assumed gross rate of return of 0% and disclose the 0% gross and

resulting net rates used.

Disclose and deduct the maximum guaranteed charges for each assumed rate of

return.

Reflect an arithmetic average of all expenses of investment options.

Depict year-by-year account values.

If the illustration exceeds ten years, then it may depict account values for year 1

through 10, then for every five years beyond the 10th year, and for the final year.

22

Variable Life Insurance Hypothetical Illustrations


Subject to FINRA Rule 2220.

Principal approval: Retail communications must be approved in advance.

Institutional communications and correspondence in accordance with the firm’s supervisory procedures.

Communications used prior to delivery of the Options Disclosure Document (ODD): Retail communications must be filed 10 calendar days prior to use and require FINRA

approval prior to use.

Must provide a source for obtaining a copy of the ODD.

Must be limited to general descriptions of the options being discussed.

Must not contain recommendations, performance, or names of specific securities.

Communications used with the ODD may be filed voluntarily.

23

Communications Concerning Options


DKIM International Value Fund (DKIMV)

DKJP Distributors, LLC Member FINRA

Past performance is no guarantee of future results. SC Rankings — SC Analytical Services,

Inc. is an independent publisher of mutual fund rankings, records rankings for these and other

DKIM Funds for one-year, three-year, five-year, and ten-year total returns periods. SC Analytical

Services compares mutual funds within a universe of funds with similar investment objectives,

including dividend reinvestment. SC Rankings are based on risk-adjusted at net asset value and

do not reflect sales charges. SC Rankings do not imply that the fund had a high total return.

Name of the

ranking categoryNumber of investment

companies in the category

Name of the

ranking entity

Length of

the period

Ending date

of the period

Criteria of the ranking

An international equity fund investing in stocks that has competitive

marks among its peers.

DKIMV 1-Year 5-Year 10-YearAs of 09/30/2017 17 out of 285 20 out of 254 12 out of 186

Based on risk-adjusted return, the International Equity Fund placed within the highest 10% of funds

in the 1-, 5-, and 10-year rankings by SC Ranking Services in the Foreign Large Value Category.

FINRA Rule 2212: Investment Company Rankings


Subject to FINRA Rule 2214.

Definition:

Interactive;

Produces simulations and statistical analyses; and

Presents the likelihood of various investment outcomes if certain

investments or strategies are undertaken.

Template of report is no longer a required filing. However,

access to the tool must be provided at FINRA’s request.

25

Investment Analysis Tools – Overview


Investment Analysis Tool retail communications (except incidental references) must include required disclosures: Describe the criteria and methodology used, including the investment analysis

tool’s limitations and key assumptions;

Explain that results may vary with each use and over time;

If applicable, describe the universe of investments considered, how the investments are selected, explain if and why some securities are favored, and state that other investments may be similar or superior to those being analyzed; and,

Clearly show the hypothetical nature of the results which do not reflect actual results and are not guarantees of future results.

These disclosures required by FINRA Rule 2214(c), should be clear, prominent, and written in narrative form.

26

Investment Analysis Tools – Required Disclosures


Social Media: Core Concepts

Personal vs. business use

Static vs. interactive communications

Adoption and entanglement

• Recordkeeping

• Supervision

• Third-party content

27


Social Media: FINRA Regulatory Notices

In addition: SEC IM Guidance Update 2013-01 – March 2013

10-06: Guidance on Blogs and Social Networking Web Sites (January 2010)

▪ Recordkeeping responsibilities

▪ Suitability responsibilities

▪ Types of interactive electronic forums

▪ Supervision of social media sites

▪ Third-party posts

11-39: Social Media Websites and the Use of Personal Devices for Business Communications (August 2011)

▪ Recordkeeping

▪ Supervision

▪ Links to third-party sites

▪ Data feed

17-18: Guidance on Social Networking Websites and Business Communication (April 2017)

▪ Text messaging

▪ Personal communications

▪ Hyperlinks and sharing

▪ Native advertising

▪ Testimonials and endorsements

▪ Correction of third-party content

▪ BrokerCheck


Understand what rules and standards apply to the specific product being promoted.

Ensure your communications are fair and balanced.

Don’t omit material information.

Accompany non-standardized performance with standardized performance.

Be mindful of the proximity requirement for performance disclosure.

Clearly identify a variable product as either an annuity or life insurance.

Remember that the VA performance inception date is keyed off the separate account.

Prior approval from FINRA is required for options retail communications not used with

the ODD.

Understand your firm’s responsibility with respect to social media and digital

communications.

29

Important Take-Aways


Advertising Compliance Bootcamp

Selected Topics



31

Advertising Compliance Bootcamp: Selected Topics


Current Trends and Topics for Investment Company Communications Thursday, October 5 1:45 p.m. - 2:45 p.m. Join FINRA staff and industry panelists as they discuss advertising compliance issues concerning registered investment companies, including mutual funds, ETFs and closed-end funds. The panel includes discussions on current trends, changes to FINRA Rule 2210 and recent regulatory interpretations, including related performance. The panelists also share tips to strengthen the marketing and compliance relationship when developing compliant communications.

Moderator: Derek Ashworth Associate Director FINRA Advertising Regulation Panelists: Darrian Hopkins Director and Compliance Officer TIAA Lynn Lawson Associate Manager FINRA Advertising Regulation Danielle Nicholson Smith Vice President and Legal Counsel – U.S. Communications and Digital Services T. Rowe Price Investments Services, Inc.

I. Introduction

II. Discussion of Advertising Review Process A. T. Rowe Price Process B. TIAA Process C. Advertising Department Process

III. Recent Regulatory Updates Affecting Investment Companies

A. Rule 2210 Amendments (Exemptions from filing requirement) B. Related Performance C. SEC – Money Market Fund Disclosure (effective October 2016) D. DOL Rule

IV. Themes in Communications – What are investment company communications discussing?

A. Common discussions (e.g., active vs. passive debate, hunt for yield, new investment strategies)

B. Concerns (e.g., comparisons, accurate descriptions, risks)


C. Product space (e.g., mutual funds, exchange-traded funds, closed-end interval funds, digital investment advice)

D. Risk Disclosure for Current Market Conditions (SEC Guidance Update, March, 2016)

V. Communication Mediums A. Successes and challenges of creating communications for different mediums

(disclosure) B. Social media parameters (how do firms determine what to use)

VI. Strengthening the Marketing, Legal and Compliance Relationship

A. T. Rowe Price – Agile process B. TIAA – Collaborative process C. FINRA – How FINRA can contribute

VII. Q&A and Wrap Up


Current Trends and Topics for Investment Company Communications Panelist Bios: Moderator: Derek Ashworth is Associate Director in FINRA’s Advertising Regulation Department. The department protects investors by ensuring broker-dealer members of FINRA use communications that are fair, balanced and not misleading. Mr. Ashworth’s primary responsibility is managing staff members dedicated to the routine review of member firm communications. Mr. Ashworth also participates in the Department’s outreach efforts including serving as a panelist in prior FINRA conferences and presenting during selected FINRA Compliance Boot Camps. He has been with the Advertising Regulation Department for 17 years. Prior to joining FINRA, Mr. Ashworth was a program manager for a business and education partnership at Nova Southeastern University in Fort Lauderdale, FL. Previous to this role, he was a specialty banker and registered representative with First Union in West Palm Beach, FL. Mr. Ashworth received his bachelor’s degree from Stetson University and completed his M.B.A. at Johns Hopkins University. Panelists: Darrian Hopkins is Director and Compliance Officer responsible for leading TIAA’s Marketing Compliance and Oversight Program. This team leads all oversight activities for TIAA’s marketing review program to ensure compliance with applicable advertising laws, rules and regulations. Mr. Hopkins joined TIAA in February 2006 from FINRA, where he was an Associate Supervisor in the Advertising Regulation Department. Mr. Hopkins spent nine and a half years in the Department and, prior to that, he spent five years with the U.S. Securities and Exchange Commission also in Washington, DC. While at FINRA, Mr. Hopkins was a frequent speaker on various panels at FINRA’s annual Advertising Regulation Conference. Mr. Hopkins is a graduate of the University of South Carolina. Lynn Lawson is an Associate Manager in FINRA’s Advertising Regulation Department. Her primary responsibilities include training and mentoring assigned staff and conducting reviews of complex communications for compliance with applicable advertising rules. She is also the Department’s Training Committee Coordinator and has been a speaker at FINRA’s Advertising Regulation Department annual conference since 2011. Prior to joining FINRA, she worked as a contract attorney and in the financial services industry. She holds Series 7, 24 and 63 registrations. Ms. Lawson is also a graduate from The Catholic University of America, Columbus School of Law and earned a B.A. in English from Spelman College. She is also holds the designation of a Certified Regulatory and Compliance Professional from the FINRA Institute at Wharton and is a member of the District of Columbia Bar. Danielle Nicholson Smith is Legal Counsel for U.S. Communications and Digital Services and Vice President of T. Rowe Price Investment Services, Inc. She joined T. Rowe Price in 1992. Most of her 25 years in the industry have been spent on the application of FINRA and SEC Advertising Rules to communications with the public. Ms. Smith oversaw the principal review and filing with FINRA of all of the firm’s mutual fund advertising and sales materials for over 15 years. She serves on the Advertising Rules Committee of the Investment Company Institute and has been a speaker on regulation of social media at the FINRA annual conference. Ms. Smith holds a bachelor’s degree from Smith College and a law degree from the University of Maryland School of Law.





Moderator

Derek Ashworth, Associate Director, FINRA Advertising

Regulation

Panelists

Darrian Hopkins, Director and Compliance Officer, TIAA

Lynn Lawson, Associate Manager, FINRA Advertising Regulation

Danielle Nicholson Smith, Vice President and Legal Counsel -

U.S. Communications and Digital Services, T. Rowe Price

Investments Services, Inc.

1

Panelists



Select the day,

Choose the Current Trends and Topics for Investment

Company Communications session,


2

To Access Polling


Segment Topics


Regulatory Updates Affecting Investment Company Communications



Strengthening the Marketing, Legal and Compliance Relationship

Questions & Answers

3

Agenda


Understanding the Communications Review

Procedure

TIAA

T. Rowe Price Investment Services, Inc.

FINRA

4


Communication AnalysisComplies or

Needs Revisions


Tips for Filing Submissions with FINRA

Indicate if the communication is promoting a new product or represents a new marketing campaign

Explain how the communication will be used and describe necessary context

Provide supporting documents (e.g., prospectus)

Clarify if the communication will be preceded or accompanied by a prospectus

Indicate if previous versions of the communication have been filed

Identify the landing page or relevant ‘linked’ content for digital communications

5



Rule 2210 Amendments – Filing Exclusions

Investment company shareholder reports

Generic investment company communications

Templates

– Expanded to include non-predictive narrative content

Backup material for investment company performance

rankings & comparisons

6


Communications


1. What filing exclusion has had the most impact on

your firm’s communications?

a. Investment company shareholder reports

b. Generic investment company communications

c. Templates (expansion to include non-predictive narrative content)

d. Back-up material for investment company performance rankings &

comparisons

e. All of the above

7

Polling Question 1


Guidance for Related Performance in Institutional

Communications

Use of related performance for continuously offered closed-end

funds is permitted – consistent with conditions in June 9, 2017

Interpretive Letter

Related performance can be net of fees of the subject mutual fund

(Interpretive Guidance Question, March 9, 2017)

Related performance guidance can apply to actively managed

ETFs (Interpretive Guidance Question, March 9, 2017)

8


Communications


Money Market Fund Reforms (October, 2016)

Amendments to the disclosure statements that must appear in

money market fund communications

DOL Fiduciary Rule

Firm preparation and response

9


Communications


Themes in Discussions

Great Debate: Active or Passive Management

Hunt for Yield

Benefits of Multi-factor Strategies

Protection from Managed Volatility Strategies

10


Products

Trends

Themes


Potential Discussion Concerns

Fair and balanced comparisons

Accurate description of investment or strategy

Explanation of risks

Consideration of the audience

11


Products

Trends

Themes


Product Considerations

Closed-end funds

– Interval funds

Alternative funds

– Floating-rate loan funds

–Unconstrained bond funds

– Long/short funds

–Multi-currency funds

Digital investment advice tools

12


Products

Trends

Themes


Disclosure Practices

Consider market conditions and the impact on fund risks

Assess whether current risk disclosure is adequate

13


Products

Trends

Themes


Challenges of Responsive Web Design Technology

Web content used in other device formats (smartphones or

tablets)

Presentation of disclosure (clarity, proximity and prominence)

Considerations for Social Media Presence

Identifying audience and channel(s)

Incorporating compliance in strategy

14




15


Relationship

Marketing

ComplianceLegal


2. How would you characterize the collaboration

including responsiveness between the compliance,

marketing and legal teams/staff at your firm when

creating communications?

a. Extremely responsive

b. Very responsive

c. Somewhat responsive

d. Not so responsive

e. Not at all responsive

16

Polling Question 2



Collaboration

Agility

FINRA feedback

17


Relationship

Marketing

ComplianceLegal




Questions & Answers


Current Trends and Topics for Investment Company Communications Thursday, October 5 1:45 p.m. – 2:45 p.m. Resources General Guidance (Communications With the Public) Notices

FINRA Regulatory Notice 17-18, Guidance on Social Networking Websites and Business Communications (April 2017)


FINRA Regulatory Notice 16-41, SEC Approves Amendments to Rules Governing Communications With the Public (October 2016)


FINRA Regulatory Notice 15-50, SEC Approves Rule Requiring Members’ Websites to Include a Readily Apparent Reference and Hyperlink to BrokerCheck (December, 2015)

www.finra.org/sites/default/files/Notice_Regulatory_15-50.pdf

FINRA Regulatory Notice 15-17, Guidance on Rules Governing Communications With the Public (May 2015)


FINRA Regulatory Notice 15-16, FINRA Requests Comment on Proposed Amendments to Rules Governing Communications With the Public (May 2015)


FINRA Regulatory Notice 13-03, FINRA Provides Guidance on New Rules Governing Communications With the Public (January 2013)


FINRA Regulatory Notice 12-29, SEC Approves New Rules Governing Communications With the Public – Effective Date: February 4, 2013 (June 2012)




http://www.finra.org/sites/default/files/Notice_Regulatory_15-50.pdf






FINRA Regulatory Notice 11-49, Advertising Regulation: FINRA Provides Guidance on Advertising Regulation Issues (October 2011)


FINRA Regulatory Notice 11-39, Guidance on Social Networking Websites and Business Communications (August 2011)


FINRA Regulatory Notice 10-06, Guidance on Blogs and Social Networking Web Sites (January 2010)


Miscellaneous

Podcast, Communications with the Public Rule Amendments (January 9, 2017)

www.finra.org/industry/podcasts/communications-public-rule-amendments

Podcast, Communications With the Public Consolidated Rule – Part 2 (February 26, 2013)


Podcast, Communications with the Public Consolidated Rule – Part 1 (February 12, 2013)


Advertising Regulation Frequently Asked Questions (FAQ) Frequently asked questions related to advertising regulation (January 8, 2017)

www.finra.org/industry/issues/faq-advertising

FINRA Information Notice Use of FINRA Logo (January 2016)

www.finra.org/sites/default/files/notice_doc_file_ref/Information-Notice_010816.pdf

Mutual Funds Rules and Notices



FINRA Regulatory Notice 08-82, FINRA Reminds Firms of Their Sales Practice Obligations with Regard to Cash Alternatives (December 2008)


FINRA Regulatory Notice 08-81, FINRA Reminds Firms of Their Sales Practice Obligations with Regard to the Sale of Securities in a High Yield Environment (December 2008)





http://www.finra.org/industry/podcasts/communications-public-rule-amendments



http://www.finra.org/industry/issues/faq-advertising

http://www.finra.org/sites/default/files/notice_doc_file_ref/Information-Notice_010816.pdf





NASD Notice to Members 06-48, SEC Approves Amendments to NASD Rules 2210 and 2211 to Require Disclosure of Fees and Expenses in Mutual Fund Performance Sales Material (September 2006)


NASD Notice to Members 06-05, SEC Approves Permanent Rules Concerning Bond Mutual Fund Volatility Ratings – Effective Date: December 27, 2005 (January 2006)


NASD Notice to Members 04-86, Investment Analysis Tools (November 2004)


NASD Notice to Members 00-21, NASD Regulation Reminds Members of Their Responsibilities When Advertising Recent Mutual Fund Performance (April 2000)


NASD Notice to Members 98-107, NASD Reminds Members Of Their Obligations To Disclose Mutual Fund Fees (December 1998)


Miscellaneous

SEC Guidance Update, Fund Disclosure Reflecting Risks Related to Current Market Conditions No. 2016-02 (March 2016)


FINRA Interpretive Letter, The use of related performance information in institutional communications, subject to specific conditions, is consistent with the applicable standards of FINRA Rule 2210. (May, 2015)

www.finra.org/industry/interpretive-letters/may-12-2015-1200am

Podcast, Cash Alternatives (March 16, 2009)

www.finra.org/industry/podcasts/cash-alternatives

Regulatory & Compliance Alert, Inaccurate Performance Graphs Result in Formal Action (Summer 2000), Page 9


Regulatory & Compliance Alert, Sudden Performance Changes May Require More Information (Summer 1999), Page 16


Investor Alerts

Investor Alert, Updated: Duration—What an Interest Rate Hike Could Do to Your Bond Portfolio (March 6, 2017)








http://www.finra.org/industry/interpretive-letters/may-12-2015-1200am

http://www.finra.org/industry/podcasts/cash-alternatives





Investor Alert, Frontier Funds – Travel with Care (Last Updated: September 11, 2014)

www.finra.org/investors/alerts/frontier-funds

Investor Alert, Alternative Funds Are Not Your Typical Mutual Funds (Last Updated: June 11, 2013)

www.finra.org/investors/alerts/alternative-funds-are-not-your-typical-mutual-funds

Investor Alert, Duration – What an Interest Rate Hike Could Do to Your Bond Portfolio (Last Updated: February 14, 2013)


Investor Alert, The Grass Isn’t Always Greener—Chasing Return in a Challenging Investment Environment (Last Updated: November 16, 2011)

www.finra.org/investors/alerts/grass-isnt-always-greener

Investor Alert, Class B Mutual Fund Shares: Do They Make the Grade? (Last Updated: October 11, 2008)

www.finra.org/investors/alerts/class-b-mutual-fund-shares-do-they-make-grade

Investor Alert, Understanding Mutual Fund Classes (Last Updated October 6, 2008)

www.finra.org/investors/alerts/understanding-mutual-fund-classes

Investor Alert, Funds of Hedge Funds – Higher Costs and Risks for Higher Potential Returns (Last Updated: October 6, 2008)

www.finra.org/investors/alerts/funds-hedge-funds-higher-costs-and-risks-higher-potential-returns

Investor Alert, Mutual Fund Breakpoints: Are You Owed a Refund? (Last Updated: November 3, 2003)

www.finra.org/investors/alerts/mutual-fund-breakpoints-are-you-owed-refund

Investor Alert, Principal-Protected Funds – Security Has a Price (Last Updated: March 27, 2003)

www.finra.org/investors/alerts/principal-protected-funds-security-has-a-price

Investor Alert, Mutual Fund Breakpoints: A Break Worth Taking (Last Updated: January 14, 2003)

www.finra.org/investors/alerts/mutual-fund-breakpoints-break-worth-taking

Exchange-Traded Funds Rules and Notices



FINRA Regulatory Notice 09-31, FINRA Reminds Firms of Sales Practice Obligations Relating to Leveraged and Inverse Exchange-Traded Funds (June 2009)


http://www.finra.org/investors/alerts/frontier-funds

http://www.finra.org/investors/alerts/alternative-funds-are-not-your-typical-mutual-funds


http://www.finra.org/investors/alerts/grass-isnt-always-greener

http://www.finra.org/investors/alerts/class-b-mutual-fund-shares-do-they-make-grade

http://www.finra.org/investors/alerts/understanding-mutual-fund-classes

http://www.finra.org/investors/alerts/funds-hedge-funds-higher-costs-and-risks-higher-potential-returns

http://www.finra.org/investors/alerts/mutual-fund-breakpoints-are-you-owed-refund

http://www.finra.org/investors/alerts/principal-protected-funds-security-has-a-price

http://www.finra.org/investors/alerts/mutual-fund-breakpoints-break-worth-taking




Miscellaneous

FINRA Interpretive Letter, Additional Guidance Regarding the Use of Pre-Inception Index Performance in Institutional Communications (April 22, 2013)

www.finra.org/industry/interpretive-letters/april-22-2013-1200am

SEC Fast Answers, Exchange-Traded Funds (ETFs) (Modified: November 8, 2013)

www.sec.gov/fast-answers/answersetfhtm.html

Podcast, Non-Traditional Exchange-Traded Funds (July 13, 2009)

www.finra.org/industry/podcasts/non-traditional-exchange-traded-funds

FINRA Guidance, Non-Traditional ETFs Frequently Asked Questions

www.finra.org/industry/non-traditional-etf-faq News / Alerts

Investor Bulletin: Exchange-Traded Funds (ETFs) (August 10, 2012)


Investor Alert, Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors (Last Updated: August 18, 2009)

www.finra.org/investors/alerts/leveraged-and-inverse-etfs-specialized-products-extra-risks-buy-and-hold-investors

News Release, FINRA, SEC Warn Retail Investors About Investing in Leveraged or Inverse ETFs (August 18, 2009) www.finra.org/newsroom/2009/finra-sec-warn-retail-investors-about-investing-leveraged-or-inverse-etfs

Regulatory & Compliance Alert, Exchange-Traded Fund Performance (Fall 2001), Pages 12 & 13


Closed-End Funds

FINRA Interpretive Letter A member firm may include related performance information in institutional communications concerning continuously offered closed-end funds, subject to the stated conditions discussed in the letter. (June, 2017)

www.finra.org/industry/interpretive-letters/june-12-2017-1200am

Investment Company Institute, Frequently Asked Questions About Closed-End Funds and Their Use of Leverage (May 2017)

www.ici.org/cef/background/faqs_closed_end

Investment Company Institute, A Guide to Closed-End Funds (May 2017)

www.ici.org/cef/background/bro_g2_ce

http://www.finra.org/industry/interpretive-letters/april-22-2013-1200am

https://www.sec.gov/fast-answers/answersetfhtm.html

http://www.finra.org/industry/podcasts/non-traditional-exchange-traded-funds

http://www.finra.org/industry/non-traditional-etf-faq









https://www.ici.org/cef/background/faqs_closed_end

https://www.ici.org/cef/background/bro_g2_ce


SEC Fast Answers, Closed-End Fund Information (Modified: January 16, 2013)

www.sec.gov/fast-answers/answersmfclosehtm.html

NASD Notice to Members 03-07, NASD Reminds Members of Obligations When Selling Hedge Funds (February 2003)


https://www.sec.gov/fast-answers/answersmfclosehtm.html



General Brokerage Communications Trends Thursday, October 5 1:45 p.m. – 2:45 p.m. Panelists from FINRA and the industry discuss advertising compliance and sales practice issues applicable to general brokerage firms and their registered representatives. Industry panelists explore advertising compliance challenges and how they address the advertising rules with respect to dually registered representatives, marketing materials created by third parties, and new investment products. This panel also covers current areas of interest such as business development companies, private placements and research reports. Moderator: David Roscum Associate Director FINRA Advertising Regulation Panelists: Stephanie Gregory Principal Analyst FINRA Advertising Regulation

Kimberly Johnson Vice President of Marketing Regulatory Review LPL Financial, LLC Robert Sondheim Director, Compliance E*TRADE Securities LLC

I. Introduction

II. Firm’s Advertising Compliance review process

III. Seminars and Radio Shows

IV. Material used by dually registered representatives

V. Wrap-up


General Brokerage Communications Trends Panelist Bios: Moderator: David Roscum is a manager in the Advertising Regulation Department and oversees staff involved in the Investigative, Spot-Check and Filing programs. In addition to his 20-plus years of regulation experience, Mr. Roscum served as a compliance officer for T. Rowe Price for five years, and was a registered investment adviser and registered representative for three years. Mr. Roscum is a CPA and holds a bachelor’s degree from The University of Iowa, an M.B.A. from Marymount University and a master’s degree in taxation from Taft University. Panelists: Stephanie Gregory is Principal Analyst in FINRA's Advertising Regulation Department. Prior to joining FINRA in 2004, Ms. Gregory worked in compliance and advertising review with a member firm. Ms. Gregory received a bachelor’s degree in economics and political science from Boston University, and her law degree from Pennsylvania State University Dickinson School of Law. Kimberly Johnson is Vice President of Marketing Regulatory Review at LPL Financial. In this role, she is responsible for the oversight of the Firm’s policies and procedures of all communications distributed by LPL or their advisors. This includes all advisor use only content, corporate communications, research materials and information prepared for advisor use with their clients and/or prospects. Further, Ms. Johnson has ultimate responsibility of the department’s compliance program to ensure all communications with the public are compliant with FINRA Rule 2210, applicable regulatory and state requirements and LPL policies. Ms. Johnson has accumulated more than 17 years of industry experience and has held various compliance roles in a similar capacity at MetLife, MassMutual and TradeKing. She graduated from the University of Connecticut at Storrs with a BA in communications and holds FINRA series 4, 7, 24, and 63 licenses. Robert Sondheim is Director, Compliance at E*TRADE and is responsible for managing the Firm’s advertising review department. He has over 25 years’ experience in the financial services industry, including four years as a Supervising Analyst in FINRA’s Advertising Regulation department, where he managed the review of member firms’ advertising and sales literature for compliance with FINRA, SEC, MSRB and SIPC rules and regulations. He has been with E*TRADE since 2002 and has held various managerial roles within the Firm’s compliance program. Mr. Sondheim holds the Series 4, 7, 24, 51 and 63 licenses.


General Brokerage Communications

Trends


Moderator

David Roscum, Associate Director, FINRA Advertising Regulation

Panelists

Stephanie Gregory, Principal Analyst, FINRA Advertising Regulation

Kimberly Johnson, Vice President of Marketing Regulatory Review, LPL Financial, LLC

Robert Sondheim, Director, Compliance, E*TRADE Securities LLC

1

Panelists


What we do, business and type of advertisements

Advertising compliance review process

Training staff

Keeping current with advertising rules and guidance

How we approach risk

2

From the Firm’s Perspective


Training registered representatives

Providing pre-approved content

Registered representative created content

Turnkey services

Vendor participation

Considerations for client events

3

Seminars and Radio Shows


Choosing business partners

Vetting third-party vendors and sales material

Review and approval process

Third-party websites

4

Third-Party Created Sales Material


Target marketing

Marketing to seniors

Complex product communications

Securities-backed lines of credit

Business Development Companies

Private Placements

Research Reports

5

Unique Communications


Review and approval process

Filing sales material

Regulatory challenges

6

Dually Registered BD / IA Representatives


How registered representatives promote themselves

Designations

Awards

Titles

Business group names

7

Registered Representative Considerations


General Brokerage Communications Trends Thursday, October 5 1:45 p.m. – 2:45 p.m. Resources FINRA Notices

FINRA Regulatory Notice 15-31, Debt Research (August 2015)


FINRA Regulatory Notice 15-30, Equity Research (August 2015)


FINRA Regulatory Notice 12-29, Communications with the Public. SEC Approves New Rules Governing Communications with the Public (June 2012)


FINRA Regulatory Notice 12-03, Heightened Supervision of Complex Products (January 2012)


FINRA Regulatory Notice 10-52, Application of Rules on Communications With the Public and Institutional Sales Material and Correspondence to Certain Free Writing Prospectuses (October 2010)


FINRA Regulatory Notice 10-09, Reverse Convertibles. FINRA Reminds Firms of Their Sales Practice Obligations With Reverse Exchangeable Securities (Reverse Convertibles) (February 2010)


FINRA Regulatory Notice 08-82, Sales Practice Obligations with Regard to Cash Alternatives (December 2008)


FINRA Regulatory Notice 08-27, Supervising Registered Representatives’ Use of Marketing Materials to Establish Expertise (May2008)


http://www.finra.org/sites/default/files/Regulatory-Notice-15-31.pdf









FINRA Regulatory Notice 07-43, FINRA Reminds Firms of Their Obligations Relating to Senior Investors and Highlights Industry Practices to Serve these Customers (September 2007)


Notice to Members 05-59, Structured Products. NASD Provides Guidance Concerning the Sale of Structured Products (September 2005)


Notice to Members 03-71, Obligations When Selling Non-Conventional Investments (November 2003)


Investor Alert

Structured Notes With Principal Protection: Note the Terms of Your Investment (June 2011)

www.finra.org/investors/alerts/structured-notes-principal-protection-note-terms-your-investment

Reverse Convertibles – Complex Investment Vehicles (February 2010)

www.finra.org/investors/alerts/reverse-convertibles-complex-investment-vehicles




http://www.finra.org/investors/alerts/structured-notes-principal-protection-note-terms-your-investment

http://www.finra.org/investors/alerts/reverse-convertibles-complex-investment-vehicles


Design Thinking Workshop Thursday, October 5 3:00 p.m. – 4:00 p.m. Christine Wheatley, Design Strategist at Fidelity Labs, leads this dynamic session on using design thinking principles to create more effective disclosures in communications with the public. Moderator: Christine Wheatley Principal Design Strategist Fidelity Investments LLC Panelists: Alexander Gavis Senior Vice President and Deputy General Counsel, FMR Legal Department Fidelity Investments LLC Thomas Pappas Vice President FINRA Advertising Regulation

I. Introduction

II. Overview of Design Thinking A. What is Human Centered Design B. What is Empathy Research C. What is Rapid Prototyping and Testing

III. Design Thinking Exercises

A. Developing User Empathy and Seeking Opportunities B. Designing a Prototype C. Testing for Actionable Feedback

IV. Debrief

A. Applying Design Thinking to Your Work B. New Areas to Explore C. Resources


Design Thinking Workshop Panelist Bios: Moderator: Christine Wheatley is a principal design strategist at Fidelity Labs where she has applied human-centered design to everything from financial wellness to digital currency. In her role, Ms. Wheatley helps her colleagues bring a customer lens to their work and translate people’s needs into design solutions. Prior to joining Fidelity Labs, Ms. Wheatley was focused on solving problems in the non-profit sector at both The Clinton Foundation and UNICEF. Ms. Wheatley is a graduate of the MBA program at the Rotman School of Management where she served as Director of the Rotman Design Challenge. Panelists: Alexander C. Gavis is Senior Vice President & Deputy General Counsel in the Corporate Legal Department of FMR LLC, the parent company of Fidelity Investments, one of the largest brokerage and mutual fund companies in the United States and the leading provider of workplace retirement savings plans. He manages a team of attorneys and professionals responsible for providing legal services to the firm's retail brokerage, stock plan and workplace retirement businesses. He also oversees and manages legal services for Fidelity's businesses involved in electronic and mobile commerce, start-up innovation, and social media. Mr. Gavis provides legal advice on all of Fidelity’s national advertising and marketing initiatives. Prior to joining Fidelity in 1997, Mr. Gavis served as Assistant Counsel at the Investment Company Institute and as Senior Counsel in the Office of General Counsel at the U.S. Securities and Exchange Commission, both in Washington, DC. He also served as a judicial law clerk for The Honorable William T. Allen, Chancellor of the Court of Chancery for the State of Delaware. He has worked in investment banking in New York at Salomon Brothers Inc, handling mergers and acquisitions. Mr. Gavis received his J.D., cum laude, from the University of Pennsylvania Law School, where he served as Editor-in-Chief of the University of Pennsylvania Law Review, and his bachelor’s degree, with High Honors and Phi Beta Kappa, from Swarthmore College. As an adjunct professor at Suffolk University Law School, he teaches the class “Designing Thinking for Lawyers and Business Professionals” and has taught at the Stanford University Design and Law Schools and at Harvard Law School. Mr. Gavis currently serves as chair of FINRA’s Public Communications Committee and past member of the Social Media Task Force (chair) and E-Brokerage (chair) and Membership Committees. Thomas A. Pappas is Vice President of the FINRA Advertising Regulation Department, which regulates the advertisements, sales literature and correspondence used by FINRA member firms. His responsibilities include rule development, management of the filing and surveillance programs and related enforcement activities. He served in the same role at NASD before its 2007 consolidation with NYSE Member Regulation, which resulted in the formation of FINRA. He was previously registered with Davenport & Company LLC. He received a bachelor’s degree from The University of Richmond and an MBA from Virginia Commonwealth University.


Design Thinking Workshop


Moderator

Christine Wheatley, Principal Design Strategist, Fidelity

Investments LLC

Panelists

Alexander Gavis, Senior Vice President and Deputy General

Counsel, FMR Legal Department, Fidelity Investments LLC


1

Panelists

89% OF COMPANIES BELIEVE

CUSTOMER EXPERIENCE WILL

BE THEIR PRIMARY BASIS OF

COMPETITION IN 2016.(in 2011 that number was 36%)

“IF WE LOOK DEEPLY INTO

MOST PROBLEMS, WE WILL

FIND PEOPLE. BUT IF WE

LOOK DEEPLY INTO

PEOPLE, WE WILL FIND

OUR SOLUTIONS.” – DAN

ROAM


Helping Small Firms Navigate the Communications Rules Thursday, October 5 3:00 p.m. – 4:00 p.m. How do small firms stay in compliance with the communications with the public rules? FINRA staff and industry panelists answer audience questions and provide practical tips and helpful guidance. Moderator: Gregory Riviello Director FINRA Advertising Regulation Panelists: Nanette Chern Chief Compliance Officer Funds Distributor, LLC John Veator Senior Director FINRA Member Relations and Education James Webb Principal and Chief Executive Officer Cape Securities, Inc.

I. Introduction

II. Challenges small firms face

III. Addressing those challenges A. Supervision, recordkeeping B. Working with marketing/registered reps C. Complying with the advertising rules D. Technology

IV. Working with FINRA

V. Tips for successful advertising compliance

VI. Wrap-up


Helping Small Firms Navigate the Communications Rules Panelist Bios: Moderator: Gregory Riviello is a director in FINRA’s Advertising Regulation Department which is responsible for the regulation of FINRA member firms’ communications with the public. Mr. Riviello is responsible for supervising the daily activities of 25 staff devoted to the review of communications filed with the Department. He provides guidance to Department staff and FINRA firms on the application of the advertising rules and interpretations and also assists with the development of these rules. His other responsibilities include coordinating the Department’s recruiting, training and quality control functions. Mr. Riviello has spoken about various advertising regulation topics at industry events and at the FINRA Advertising Regulation Conferences. Mr. Riviello has more than 35 years of experience in the securities industry including 27 years with the Advertising Regulation Department. He is a graduate of West Chester State University in West Chester, Pennsylvania, and holds an MBA from the University of Maryland. Panelists: Nanette K. Chern is Chief Compliance Officer for Funds Distributor, LLC, a subsidiary of Foreside Financial Group, LLC based in Portland, Maine. Funds Distributor, LLC is a limited purpose broker-dealer that serves as the principal underwriter to open-end investment companies and as placement agent to privately placed funds. Additionally, Funds Distributor, LLC provides registered representative services to employees of fund sponsors that market fund shares. Ms. Chern serves as the Chief Compliance Officer of eight additional affiliated broker-dealers, as well as serving as the AML Compliance Officer. Ms. Chern has 30 years of experience working in the securities industry with distributors that provide distribution and compliance services to open- and closed-end funds, exchange-traded products, commodity pools, and private placements. Prior to joining Foreside and its affiliated and predecessor firms in 1995, Ms. Chern served as Assistant Counsel at First Investors Corporation in New York City and as Staff Attorney at the New York Regional Office of the U.S. Securities and Exchange Commission. Ms. Chern graduated from Swarthmore College and Fordham University School of Law and maintains her Series 7, 24, and 79 licenses. John Veator is Senior Director in FINRA’s Office of Member Relations and Education. His duties include advising firms on FINRA initiatives, rules and resources. He also collects feedback from the industry and advocates for changes to FINRA’s programs where appropriate. Previously, he was a senior counsel in FINRA’s Regulatory Policy Office, where he advised FINRA exam staff on rule interpretations and conducted administrative actions. He was also a senior staff member of FINRA’s Registration and Disclosure Department, where he advised on state securities laws and processes. Prior to joining FINRA, Mr. Veator served as the North American Securities Administrators Association’s (NASAA) Deputy General Counsel and was NASAA’s Acting General Counsel when he left the association to join NASD. Mr. Veator received his bachelor’s degree from Colgate University and his JD from Vanderbilt Law School. Jim R. Webb, Principal and CEO of Cape Securities, Inc., began his career in 1990 as a financial planner and has continued to grow in the evolving industry. For 14 years of his 27 years, he worked for several fund and annuity companies as their regional wholesaler. In that time, he met with thousands of brokers and hundreds of broker dealers and was a valued partner in their growth. Mr. Webb’s leadership skills, passion for improved services for his clients and reputation as a problem solver all contributed to his success as a wholesaler. In 2007, Mr. Webb became the owner of Cape Securities, Incorporated. Intent on overcoming the challenges of growing a FINRA compliant small firm, Mr. Webb determined that being actively involved in understanding and advocating on regulatory matters and forming strong networking relationships with other small member firms and FINRA was essential for the success and growth of his company. By his steady and enthusiastic joint commitment to his individual business interest and members of the industry as a whole, Cape has grown over the past 10 years from a tiny firm with just two financial advisors into a firm with just under 100 representatives serving customers nationwide. Mr. Webb is a member of the District 7 committee and he is on the Regulatory Advisory Committee (RAC). As a member of these committees Mr. Webb applied a practical and common-sense approach to balancing the needs of regulators, with the challenges faced by a small firm. Mr. Webb enjoys productive interaction with other FINRA members and staff in seeking solutions


to problems that face the industry nationwide, he sought to serve and has served, both past and present. Mr. Webb has served as a panelist and speaker at many FINRA regional and National meetings. Topics covered include: How a small firm can best use social media, Changes in business and how to best consult the CMA/MAP groups and Outside Business activities, among others. He currently holds Series 4, 7, 8, 24, 28, 63, and 66 Securities Registrations and insurance licenses. While building his broker dealer he created and insurance agency and a SEC registered investment advisory to provide clients a true financial concierge.


Helping Small Firms Navigate the

Communications Rules


Moderator

Gregory Riviello, Director, FINRA Advertising Regulation

Panelists

Nanette Chern, Chief Compliance Officer, Funds Distributor, LLC

John Veator, Senior Director, FINRA Member Relations and Education

James Webb, Principal and Chief Executive Officer, Cape Securities, Inc.

1

Panelists


Some of the key challenges small firms face regarding advertising compliance.

How to address some of these challenges.

How to effectively work with FINRA’s Advertising Regulation Department.

What compliance resources FINRA has available for small firms.

Important compliance tips for successfully navigating the advertising rules.

2

By the end of this session, you should know:



Select the day,

Choose the Helping Small Firms Navigate the

Communications Rules session,


3

To Access Polling


1. How would you describe your firm?

a. <10 Registered Reps

b. 10-50 Registered Reps

c. 51-150 Registered Reps

d. >150 Registered Reps

4

Polling Question 1


2. How frequently does your firm file communications

with FINRA’s Advertising Regulation Department?

a. 1 or 2 communications per year

b. 1 communication per month on average

c. 2 to 10 communications per month

d. 11 to 25 communications per month

e. 25+ communications per month

5

Polling Question 2


What are some of the biggest challenges small firms

face when it comes to advertising compliance?

6

Challenges


What is the biggest challenge your legal and compliance staff face regarding advertising compliance?

a. Supervision of advertising including WSPs that set forth a clear review process

b. Working with your marketing team and/or registered reps to ensure compliance

c. Fear of not complying with the advertising rules

d. Keeping up with the latest technologies that can help with advertising compliance or that create new ways to distribute communications

e. Record retention requirements

7

Challenges


3. What is the biggest challenge your legal and

compliance staff face regarding advertising

compliance?

a. Supervision of advertising

b. Working with marketing / registered reps

c. Fear of not complying with the rules

d. Keeping up with the latest technologies

e. Record retention

8

Polling Question 3


Supervision

Working with marketing

Complying with the rules

Technology

Record retention

9

Addressing the Challenges


Where to find written regulatory guidance on

advertising regulation

Advertising Regulation Website: www.finra.org/Advertising

–Regulatory Notices organized by subject matter

– Interpretive letters

– FINRA Rule 2210 (Communications With the Public) FAQs

10

Working with FINRA

http://www.finra.org/Advertising


Who should you call at FINRA for general compliance questions?

Who should you call at FINRA’s Advertising Regulation Department when you have questions?

Firms should always feel free to contact Advertising Regulation to discuss:

– General advertising compliance questions

– Questions about the filing requirements

– Questions about specific rule application

– Questions about comments received in a review letter

– The introduction of a new product or marketing strategy

Telephone number: 240-386-4500

11

Working with FINRA


Written supervisory procedures

Knowledgeable ad review principal

Training your staff

Review process

Engaging FINRA

12

Tips for Successful Advertising Compliance


?

13



Variable Insurance Products: Current Advertising Issues Thursday, October 5 3:00 p.m. – 4:00 p.m. Panelists from FINRA and the industry conduct this interactive session—first with a brief overview of the essentials for creating compliant communications, followed by a discussion of specific areas that frequently raise questions and regulatory challenges. The panelists also explore new developments, including complex structures of contracts and investment options, along with how firms address the compliance challenges they raise. Moderator: Pramit Das Associate Director - Technology FINRA Advertising Regulation Panelists: Richard Choi Attorney Carlton Fields Joseph George Associate Director FINRA Advertising Regulation Julie Leitwein Senior Compliance Director Nationwide Financial Services

I. Introduction

II. Creating a Variable Product Communication A. Content B. Performance C. Case Summary

III. Hypothetical Illustrations and Comparisons

IV. Complexity of Contracts and Investment Options

V. Best Practices

VI. Managing Disrupters

VII. The Definition and Standards of “Materiality”

VIII. Importance of Audience/Context, Substantiating Claims, and Disclosure


IX. Successful Review Process

X. Q&A and Wrap-up


Variable Insurance Products: Current Advertising Issues Panelist Bios: Moderator: Pramit Das is Associate Director-Technology of FINRA’s Advertising Regulation Department. In this role, his responsibilities include managing a filings review group; assisting with administration of the filings review program; developing and maintaining the department’s technology needs; providing education to members, FINRA staff and other regulatory staff; and participating in certain rule amendment and rulemaking projects as necessary. He served in the same role at NASD before its 2007 consolidation with NYSE Member Regulation. Prior to joining NASD in 1994, Mr. Das worked for Metropolitan Life Insurance Company and Arthur Andersen & Co. He holds an MBA in Finance from the University of Maryland, College Park, and an MA in Financial Economics from Clemson University, Clemson, South Carolina. He was also Series 7 and 63 registered. Panelists: Richard Choi has extensive experience advising investment companies, investment advisers, broker-dealers, and life insurance companies on federal and state securities and insurance compliance and regulatory matters. Mr. Choi's experience includes advising investment company boards, independent directors and trustees, and special committees of directors and trustees. He counsels clients on the development and distribution of sophisticated financial products, such as variable annuities, variable life insurance, and face-amount certificates. His experience also includes representation of investment advisers and investment companies in regulatory compliance inspections and examinations, opinions on the availability of 1940 Act exemptions in connection with various types of transactions, and in-house training and education seminars on a variety of regulatory and compliance matters. He has published numerous articles and regularly speaks on federal securities issues relating to variable insurance products and mutual funds. He has appeared on Bloomberg TV and has been quoted in Bloomberg, the Chicago Tribune, the Los Angeles Times, National Underwriter, U.S. Banker, the Wall Street Journal Online, and other financial and trade publications. Mr. Choi is the securities and investment companies industry group co-leader. Joseph George is Associate Director in FINRA’s Advertising Regulation Department, where he supervises analysts who review communications with the public for compliance with applicable rules. He has been with the department for more than 20 years and has spoken on panels at Advertising Regulation Department Conferences over the past 15 years. Prior to joining FINRA, he worked for New York Life as a registered representative and was a project manager with Computer Sciences Corporation. Mr. George holds a bachelor’s degree in economics from the University of Maryland. Julie Leitwein, Senior Director of Communications Compliance, is responsible for the review and approval of sales and marketing material for Nationwide Financial Services. She uses a risk-based and collaborative problem-solving approach to ensure the material hits the mark from a business and regulatory perspective. Before joining Compliance, she held various roles in Nationwide Marketing, concentrating on life insurance and annuities in financial institutions, independent broker-dealers and brokerage general agencies. Ms. Leitwein holds Series 6, 7, 24 and 26 licenses and earned a BS in Marketing from The Ohio State University and an MBA from Franklin University in Columbus, Ohio.


Variable Insurance Products: Current

Advertising Issues


Moderator

Pramit Das, Associate Director-Technology, FINRA Advertising

Regulation

Panelists

Richard Choi, Attorney, Carlton Fields

Joseph George, Associate Director, FINRA Advertising

Regulation

Julie Leitwein, Senior Compliance Director, Nationwide

Financial Services

1

Panelists


Content:

Identify the product.

Provide a sound basis to evaluate the product.

Address risks, fees, tax issues, and potential penalties, as needed.

Clearly explain how riders work, if applicable.

Disclose limitations of any guarantees mentioned.

Balance any discussion of investment features of VLI with a discussion of the insurance component.

Disclose the long-term nature of a VA.

2

Creating a Variable Product Communication


Rule Violations that Led to Formal Action

Failed to have VLI communications approved by firm’s registered

principal.

Incorrectly compared VLI to buying term life insurance and

investing the difference in a side product net of fees associated

with the side product.

Failed to accompany the comparison with a 0% illustration.

Sent article reprints and other communications to clients which: included inaccurate or incomplete statements;

over-emphasized the investment features of VLI; and

did not balance with discussion of the insurance features.

Suspension and $5,000 fine.


Creating a Variable Product Communication

Performance:

Variable Annuities: SEC performance standards apply.

Must be net of all recurring and non-recurring fees and expenses.

Returns must be keyed off inception date of separate account.

Variable Life: SEC performance standards do not apply.

Apply FINRA Rule 2210(d)(1)(A).

At a minimum, deduct investment option management fees.

Prominently disclose fees/charges deducted and not deducted.

Disclose that the performance would have been lower if all fees

and charges had been deducted.


Can we show…

(A) Separate account onward?

YES, BUT – Deduct fees and charges

Disclose CDSC

(B) Predating separate account?

YES, BUT – Deduct fees and charges

Disclose CDSC

Must also show (A)

(C) Predating separate account without fees and charges?

YES, BUT – Must also show (A) and (B)

5

Rubric for Predated Variable Annuity Performance


Hypothetical Illustrations and Comparisons

Supplemental Hypothetical Illustrations:

Weighted Average Expense

Random Rate

Split Annuity

Rider

Historical Performance

Comparisons:

Product-to-Product

Investor Driven vs. Advisor Driven

Tax Treatment


Structured Investment Options

Crediting Methods

Caps & Buffers

Alternative Investments

Leveraged ETFs

Investment-Only Variable Annuities

Fee or Commission Based

ETF-Only Variable Annuities

7

Complexity of Contracts and Investment Options


Rule Violations that Led to Formal Action

7,238 registered personnel, 923 branch offices

Misrepresentation and omission regarding costs and

guarantees of new product in 1035 exchanges, fees understated

on statements

Over 5 year period: 35,500 1035 exchanges,

$3B in VAs,

$152M in commissions

Lack of supervision: ¾ with misrepresentation or missing material information

99.79% approved

Censure, $20M fine, replacement contracts


Relationships with Business Units:

Business

– Distribution and Corporate Marketing

– Product Development

– Actuary

– Underwriting

– Legal

– Compliance

Regulators

Seat at the table

9

Industry Perspective - Best Practices


Compliance by competition

Process and controls

Training

10

Industry Perspective – Effective Practices


Product simplification v. niche Jefferson National

IMOs/BGAs

Services Intelligent underwriting

Care Concierge

Riders

Thought leadership

Distribution

Partnerships – buy, build, or partner

11

Industry Perspective – Managing Disrupters


Applies to prospectuses and oral communications that:

Contain untrue statements of a material fact.

Omit a material fact necessary to make the statements,

in light of the circumstances under which they were

made, not misleading.

12

Legal Perspective – Securities Act §12 Civil Liabilities


SEC Rule 405 definition:

“The term material, when used to qualify a requirement

for the furnishing of information as to any subject, limits

the information required to those matters to which there

is a substantial likelihood that a reasonable investor

would attach importance in determining whether to

purchase the security registered.”

13

Legal Perspective – Materiality


What might be material?

Accuracy of performance

Contributors to performance

Fees and charges

Risks

Product guarantees and features

Assumptions used in illustrations

14

Legal Perspective – Materiality


Retail investors

Mainstreet

Sophisticated investors

Seniors, non-English speaking, other special considerations

Institutional investors

Broker-dealer only

15

Legal Perspective – Audience/Context


Verify that it is:

Accurate and complete

Bona Fide

Current

16

Legal Perspective – Claim Support


Living benefits

Fixed, indexed, MVA, structured, and other products

Fees and charges

Complexity

Disclosure “creep”

Disclosure placement

Performance

Error correction

17

Legal Perspective – Disclosures


Prepare early

Review iteratively

Approve appropriately

Make filings completely

Include partners broadly

Train and educate continually

18

Legal Perspective – Process


Variable Insurance Products: Current Advertising Issues

Questions & Answers


Variable Insurance Products: Current Advertising Issues Thursday, October 5 3:00 p.m. – 4:00 p.m. Resources FINRA Rules

FINRA Rule 2211. Communications with the Public About Variable Life Insurance and Variable Annuities


FINRA Rule 2111. Suitability

http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=9859

FINRA Rule 2320. Variable Contracts of an Insurance Company


FINRA Rule 2330. Members Responsibilities Regarding Deferred Variable Annuities


FINRA Rule 3270. Outside Business Activities of Registered Persons http://finra.complinet.com/en/display/display_main.html?rbid=2403&element_id=9467

Variable Annuities: FINRA Notices:

Notice to Members 09-32, SEC Approves Amendments to NASD Rule 2821 Governing Purchases and Exchanges of Deferred Variable Annuities (June, 2009)

www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p118954.pdf

Notice to Members 08-39 , FINRA Requests Comments on Proposed New Rules Governing Communications About Variable Insurance Products (July 2008)


Notice to Members 99-35, NASD Reminds Members of their Responsibilities Regarding the Sale of Variable Annuities (May 1999)



http://finra.complinet.com/en/display/display.html?rbid=2403&element_id=9859




http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p118954.pdf


https://www.finra.org/industry/notices/99-35


Alerts:

Investor Alert, Should You Exchange Your Variable Annuity (March 2, 2006)

www.finra.org/Investors/ProtectYourself/InvestorAlerts/AnnuitiesAndInsurance/P006045

NASD Member Alert, NASD Reminds Members of their Responsibilities Regarding Hypothetical Tax-Deferral Illustrations in Variable Annuity Communications (May 10, 2004)

www.nasaa.org/wp-content/uploads/2011/08/7-P002746.htm

Investor Alert, Beyond the Hard Sell (May 27, 2003)

www.finra.org/Investors/ProtectYourself/InvestorAlerts/AnnuitiesAndInsurance/P005976

Regulatory & Compliance Alert, Performance Pre-dating the Offering of a Fund in the Variable Annuity (Summer 2002), Page 8


Regulatory & Compliance Alert, Reminder – Suitability of Variable Annuity Sales (Spring 2002) Page 13


Regulatory & Compliance Alert, NASD Regulation Cautions Firms For Deficient Variable Annuity Communications (Spring 2002), Page 10


Reports and Studies:

Joint SEC/NASD Staff Report on Examination Findings Regarding Broker-Dealer Sales of Variable Insurance Products (June 2004)

www.sec.gov/news/studies/secnasdvip.pdf

FINRA News Releases:

FINRA News Release, FINRA Sanctions MetLife Securities, Inc. $25 Million for Negligent Misrepresentations and Omissions in Connection with Variable Annuity Replacements (May 3, 2016)

www.finra.org/newsroom/2016/finra-sanctions-metlife-securities-inc-25-million-negligent-misrepresentations-and

FINRA News Release, FINRA Fines Bank Broker-Dealers $1.65 Million for Supervisory Failures in Variable Annuity, Mutual Fund and UIT Transactions (July 23, 2009)

www.finra.org/Newsroom/NewsReleases/2009/P119424

FINRA News Release, FINRA Fines Fifth Third Securities $1.75 Million for 250 Unsuitable Variable Annuities Transactions (April 14, 2009)


FINRA News Release, FINRA Hearing Panel Fines Mutual Service Corp. More than $1.5 Million for Supervisory Failures, Falsifying Records Relating to VA Exchanges (March 19, 2009)


http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/AnnuitiesAndInsurance/P006045

http://www.nasaa.org/wp-content/uploads/2011/08/7-P002746.htm

http://www.finra.org/Investors/ProtectYourself/InvestorAlerts/AnnuitiesAndInsurance/P005976




https://www.sec.gov/news/studies/secnasdvip.pdf

http://www.finra.org/newsroom/2016/finra-sanctions-metlife-securities-inc-25-million-negligent-misrepresentations-and

http://www.finra.org/newsroom/2016/finra-sanctions-metlife-securities-inc-25-million-negligent-misrepresentations-and

http://www.finra.org/Newsroom/NewsReleases/2009/P119424




FINRA News Release, David Lerner Associates Suspended from Conducting New Business in Variable Annuities, Variable Life Insurance for 30 Days, Fined $400,000 for Violation of New York State, NASD Regulations (March 2, 2006)

www.finra.org/newsroom/2006/david-lerner-associates-suspended-conducting-new-business-variable-annuities-variable

FINRA News Release, NASD Fines Hornor, Townsend & Kent, Inc. $325,000 for Improper Sales Contests, Email and Supervision Violations: Firm Ordered to Prohibit Variable Product Sales Contests for Three Years (July 6, 2005)

www.finra.org/newsroom/2005/nasd-fines-hornor-townsend-kent-inc-325000-improper-sales-contests-email-and

FINRA News Release, Waddell & Reed, Inc. Agrees to Pay $5 Million Fine, up to $11 Million in Restitution to Settle NASD Charges Relating to Variable Annuity Switching (April 29, 2005)

www.finra.org/newsroom/2005/waddell-reed-inc-agrees-pay-5-million-fine-11-million-restitution-settle-nasd-charges

FINRA News Release, Jefferson Pilot to Pay Over $500,000 in First VUL Market Timing Action; NASD Also Fines Affiliate $125,000 for E-Mail Retention Violations (March 16, 2005)

www.finra.org/newsroom/2005/jefferson-pilot-pay-over-500000-first-vul-market-timing-action-nasd-also-fines

FINRA News Release, NASD Bars Former AmSouth Broker for Fraud in the Sale of Variable Annuities (November 29, 2004)

www.finra.org/newsroom/2004/nasd-bars-former-amsouth-broker-fraud-sale-variable-annuities

Variable Life Insurance: FINRA Notices

FINRA Regulatory Notice 13-31 Suitability, FINRA Highlights Examination Approaches, Common Findings and Effective Practices for Complying With its Suitability Rule (September 2013)


NASD Notice to Members 09-42, FINRA Reminds Firms of Their Obligations With Variable Life Settlement Activities (July 2009) www.finra.org/Industry/Regulation/Notices/2009/P119547

Notice to Members 96-86, NASD Regulation Reminds Members and Associated Persons that Sales of Variable Contracts are Subject to NASD Suitability Requirements (December 1996)


NASD Notice to Members 06-38, Member Obligations with Respect to the Sale of Existing Variable Life Insurance Policies to Third Parties (August 2006) www.finra.org/Industry/Regulation/Notices/2006/p017133

https://www.finra.org/newsroom/2006/david-lerner-associates-suspended-conducting-new-business-variable-annuities-variable

https://www.finra.org/newsroom/2006/david-lerner-associates-suspended-conducting-new-business-variable-annuities-variable

https://www.finra.org/newsroom/2005/nasd-fines-hornor-townsend-kent-inc-325000-improper-sales-contests-email-and

https://www.finra.org/newsroom/2005/nasd-fines-hornor-townsend-kent-inc-325000-improper-sales-contests-email-and

https://www.finra.org/newsroom/2005/waddell-reed-inc-agrees-pay-5-million-fine-11-million-restitution-settle-nasd-charges

https://www.finra.org/newsroom/2005/waddell-reed-inc-agrees-pay-5-million-fine-11-million-restitution-settle-nasd-charges

https://www.finra.org/newsroom/2005/jefferson-pilot-pay-over-500000-first-vul-market-timing-action-nasd-also-fines

https://www.finra.org/newsroom/2005/jefferson-pilot-pay-over-500000-first-vul-market-timing-action-nasd-also-fines

https://www.finra.org/newsroom/2004/nasd-bars-former-amsouth-broker-fraud-sale-variable-annuities


http://www.finra.org/Industry/Regulation/Notices/2009/P119547


http://www.finra.org/Industry/Regulation/Notices/2006/p017133


Notice to Members 00-44, NASD Reminds Members of their Responsibilities Regarding the Sale of Variable Life Insurance (July 2000)


Alerts:

Regulatory & Compliance Alert, Fund Level Expense in Variable Life Hypothetical Illustrations (Spring 2002) (Page 12)

www.finra.org/newsroom/2004/nasd-bars-former-amsouth-broker-fraud-sale-variable-annuities

Regulatory & Compliance Alert, Presentation of Variable Life Insurance Performance in Member Communications (Winter 2001) (Page 3)


Regulatory & Compliance Alert, Internal Rate of Return in Variable Life Hypothetical Illustrations (Winter 1998) (Page 31)


Regulatory & Compliance Alert, Ask the Analyst: What are the Filing Requirements, If Any, for Variable Annuity and Variable Life Hypothetical Illustrations (Winter 1998) (Page 34)


Regulatory & Compliance Alert, Ask the Analyst: May We Discuss Tax Deferral in Our Variable Life Insurance Brochures? (Spring 1997 (Page 20) www.finra.org/sites/default/files/RCA/p002385.pdf

https://www.finra.org/industry/notices/00-44

https://www.finra.org/newsroom/2004/nasd-bars-former-amsouth-broker-fraud-sale-variable-annuities






Social Media and Digital Communications Thursday, October 5 4:15 p.m. – 5:15 p.m. FINRA and industry experts discuss the guidance provided in FINRA’s Regulatory Notice 17-18. Panelists address how firms have implemented the guidance and respond to follow-up questions. The panel also looks at developing areas, such as live streaming video and how firms integrate cybersecurity and data privacy into digital communications compliance. Moderator: Amy Sochard Senior Director FINRA Advertising Regulation Panelists: Stephen Bard

Senior Vice President - WIM Director of Social Media and Communications Compliance Wells Fargo Advisors

Ted Newton Assistant Vice President MassMutual Financial Group

I. Introduction

II. Regulatory Notice 17-18 and Follow Up Questions A. Text Messaging B. Personal Communications C. Hyperlinks and Sharing D. Native Advertising E. Testimonials and Endorsements F. Correction of Third-Party Content G. BrokerCheck Disclosure

III. Integrating Risk Management into Compliance

A. Data Privacy B. Cybersecurity

IV. Live Streaming Content and Video

A. What Does the Future Look Like??

V. Wrap Up & Questions


Social Media and Digital Communications Panelist Bios: Moderator: Amy C. Sochard is Senior Director in FINRA’s Advertising Regulation Department. The department protects investors by ensuring broker-dealer members of FINRA use advertisements and other sales communications that are fair, balanced and not misleading. Ms. Sochard leads the department’s complex and targeted review activities. She also serves as liaison to FINRA departments involved in examinations, including the departments of Enforcement and Member Regulation. In addition, Ms. Sochard oversees staff dedicated to the routine review of communications filed with the department by broker-dealers. Ms. Sochard assists in the development of rules and interpretations for communications with the public and social media, and she routinely speaks at industry events on these topics. Prior to joining FINRA’s predecessor (NASD), Ms. Sochard worked with a real estate syndication firm in Washington, DC. She received a bachelor’s degree with distinction in English from the University of Virginia and studied poetry writing at Columbia University. Panelists: Stephen R. Bard is Senior Vice President, and Wells Fargo's Wealth and Investment Management’s Director of Social Media and Communications Compliance. He leads the oversight of the Firm’s communication policies and procedures for their traditional, bank brokerage, independent, and clearing Broker Dealer/Investment Adviser dual registrants. With more than 25 year’s industry experience, he is responsible for managing the development and implementation of a risk-based compliance program to meet federal, state, agency, legal and regulatory requirements. His team annually reviews 75,000 pieces of communications including Digital Marketing submissions from social media, mobile and e-communications. He is currently a participant on FINRA’s Public Communications Committee; and was a member of their Social Media taskforce, and participated in their BrokerCheck hyperlink working group. In addition to communication related issues, he provides guidance on tools, software, Privacy and Books and Records requirements. Ted Newton is Assistant Vice President in MassMutual US Compliance. In his 30-year career in the financial services industry, Mr. Newton has been an agent, a wholesaler, a regulator and a home office compliance officer. At MassMutual, his responsibilities include reviewing advertising for the company’s direct-to-consumer and other customer experience efforts; refining advertising review procedures to increase efficiency and consistency; and serving as industry and regulatory liaison on advertising compliance-related matters. Previously, he managed training and communications for MassMutual field and home office personnel about compliance and supervision requirements, and inspections of agencies to review their supervision and compliance policies. Prior to joining MassMutual in January 1998, Mr. Newton was a supervisor in the NASD’s Advertising Regulation Department, where he supervised a team of analysts who reviewed sales materials submitted by NASD member firms. Mr. Newton graduated from Duke University in 1984 with a double major in political science and Psychology, and got his start in the industry that year with Travelers Insurance Company and its affiliated broker/dealer.


Social Media and Digital Communications


Moderator

Amy Sochard, Senior Director, FINRA Advertising Regulation

Panelists

Stephen Bard, Senior Vice President – WIM Director of Social

Media and Communications Compliance, Wells Fargo Advisors

Ted Newton, Assistant Vice President, MassMutual Financial

Group

1

Panelists



Select the day,

Choose the Social Media and Digital Communications

session,


2

To Access Polling


Understand how some firms have addressed the compliance and supervision considerations raised by the evolution of social media and digital communications including the rise of mobile technology;

Apply practical compliance approaches to messaging technology, the use of personal social media for brand advocacy, the adoption of third-party content via hyperlinks, and the growing use of advertising that mimics the communication channel in which it appears (also known as, “Native Advertising”); and,

Implement steps to help address data privacy and cybersecurity concerns when supervising social media and digital communications.

3

By the end of this session, you will be able to:


1. What is your biggest concern today in the social media space?

a. Reps embarrassing themselves or the firm with “business inappropriate” posts.

b. Reps posting false or misleading content about their securities business.

c. Reps using unauthorized social media accounts that our firm cannot supervise or retain records for.

d. Inadvertent sharing of personal information such as account numbers and investment details.

e. Cyberattack on a client or the firm using our social media.

4

Polling Question 1


Supplements, but does not replace, Regulatory Notice

10-06 and Regulatory Notice 11-39.

Responds to recommendation for more guidance

arising from FINRA’s Retrospective Review.

Public Communications Committee provided

significant advice and assistance.

5

Regulatory Notice 17-18


2. Does your firm permit representatives to use instant

messages, text messages or messaging apps in

communicating either internally or with customers?

a. Yes

b. No

c. Not sure

6

Polling Question 2


Firms must retain records of messages pertaining to

their business as such in accordance with SEA Rules

17a-3 and 17a-4 and FINRA Rule 4511.

Compliance approaches

Instant messages

Text messages

Messaging apps

BYOD considerations

7

Messaging: Regulatory Notice 17-18


A firm prohibits the use of text messaging for

business purposes.

How should the firm address the risk that a customer might initiate

contact with a representative via text message?

What about a personal exchange between a representative and an

acquaintance on email or social media where the acquaintance

initiates a business discussion?

8

Case Study


3. A rep with no outside business has an account on a business-oriented social media site. What are the firm’s responsibilities?

a. Because the rep has no OBA, the rep’s communications on the account must be considered part of the firm’s business and subject to FINRA’s communications rules.

b. Take reasonable steps to evaluate if it is a business account. If it is not, then the firm should document its review, but does not need to supervise the account for compliance with the communications rules.

c. If the firm has strong procedures, education about the difference between business and personal social media use, and annual attestations, the firm has no obligations regarding the account.

9

Polling Question 3


3. A rep with no outside business has an account on a business-oriented social media site. What are the firm’s responsibilities?

a. The rep's communications on the account must be supervised as part of the firm's business.

b. Evaluate if the account is part of the firm's business. If not, firm need only document its review.

c. If firm has strong procedures, education, and attestations, then no firm responsibility for account.

10

Polling Question 3


In a personal communication an associated person

may share or link to content that the firm makes

available that does not concern the firm’s products or

services without subjecting the communication to

FINRA Rule 2210.

Content Examples: information about the firm’s sponsorship of a

charitable event, a human interest article, an employment

opportunity, or employer information covered by state or federal fair

employment laws.

11

Personal Communications: Regulatory Notice 17-18


By linking to or sharing specific content posted by an

independent 3rd-party, a firm has adopted the specific content

and must ensure it complies with the communications rules.

Linked content may contain its own links (“secondary links”). A

firm is not responsible for the content available through such

secondary links provided:

The firm has no influence or control over the content accessed through the

secondary links; and,

The original linked content was not merely a vehicle for secondary links or

did not rely completely on the information available at the secondary links.

12

Hyperlinks and Sharing: Regulatory Notice 17-18


A firm may not have adopted content on an independent 3rd-party

website, if it posts an ongoing link to a section of the website, if:

The link is continuously available and accessible regardless of whether the

linked site contains content favorable to the firm and regardless of whether the

independent 3rd-party updates or changes its website;

The firm does not have influence or control over the independent 3rd-party

website;

The language introducing the link complies with the communications rules;

and,

The firm has not knowingly linked to false or misleading content.

13

Regulatory Notice 17-18: Ongoing Website Links


How should firms treat:

Hyperlinks to regulatory sites?

– Required (e.g., BrokerCheck)

– Voluntary (e.g., FINRA)

Following or liking an independent third-party website?

14

Hyperlinks


Native Advertising: has been defined as advertising

content that matches the form and function of the

platform on which it appears.

Firms may use native advertising that is fair, balanced, not

misleading and complies with applicable communications rules.

Influencer advertising may require more scrutiny and disclosure in

order to comply.

15

Native Advertising: Regulatory Notice 17-18


A major financial publication runs an article on

retirement strategies. Within the article are hyperlinked

phrases, such as “plan for retirement” and “retirement

planning takes focus today” that drive to a broker

dealer’s website.

Is this Native Advertising?

Are there any disclosure requirements one way or the other?

16

Case Study


Unsolicited 3rd-party comments on a firm’s social

media account generally are not deemed the firm’s

communication.

However, liking or sharing favorable comments will be

deemed adoption of the comments by the firm.

Testimonial disclosures

Advisers Act considerations

17

Testimonials & Endorsements: Regulatory Notice 17-18


Scenarios: Independent 3rd-party directory publishes incorrect information

18

Correcting 3rd Party Content: Regulatory Notice 17-18

Incorrect Information The firm contacts the directory

and provides…

Is the firm

responsible for the

corrected listing?

Wrong street address,

phone number or web

address

the correct information which is

then published.

No

Incomplete description

of the firm’s products

and services

a new, more complete description

of the products and services

which is then published.

Yes


Rule 2210 requires firms’ websites to include a readily apparent

reference and hyperlink to BrokerCheck on:

(1) the initial web page that the firm intends to be viewed by retail investors;

and,

(2) any other web page that includes a professional profile of one or more

registered persons who conduct business with retail investors.

Not required for social media and apps.

However, if an app accesses a webpage subject to the rule, the

firm must ensure the BrokerCheck link is readily apparent when

displayed.

19

BrokerCheck Disclosure: Regulatory Notice 17-18


Data Privacy and Protection

Cybersecurity

20

Integrating Risk Management Into Compliance


Live Streaming Content

• Video streams live on social media

• Afterwards, content remains as an interactive social media post

• Firm then distributes video via email, uploads it to another social network, and embeds it on its website and blog

Example: Lifecycle of a

Video Presentation


What does the future look

like for social media and

digital communications

compliance?

22

The Future


Questions & Answers

23


Social Media and Digital Communications Thursday, October 5, 2017 4:15 p.m. – 5:15 p.m. Resources FINRA

FINRA Regulatory Notice 17-18, Social Media and Digital Communications, Guidance on Social Networking Websites and Business Communications (April 2017) www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-18.pdf

FINRA Regulatory Notice 15-50, SEC Approves Rule Requiring Members’ Websites to Include a Readily Apparent Reference and Hyperlink to BrokerCheck (December 2015) www.finra.org/sites/default/files/Notice_Regulatory_15-50.pdf

FINRA Regulatory Notice 11-39, Social Media Websites and the Use of Personal Devices for Business Communications (August 2011) www.finra.org/sites/default/files/NoticeDocument/p124186.pdf

FINRA Regulatory Notice 10-06, Guidance on Blogs and Social Networking Web Sites (January 2010) www.finra.org/sites/default/files/NoticeDocument/p120779.pdf

Securities and Exchange Commission (SEC)

National Exam Program Risk Alert, Volume IV, Issue 5, August 7, 2017: Observations From Cybersecurity Examinations

www.sec.gov/files/observations-from-cybersecurity-examinations.pdf

IM Guidance Update, March 2014, No. 2014-04: Guidance on the Testimonial Rule and Social Media


IM Guidance Update, March 2013, No. 2013-01: Filing Requirements for Certain Electronic Communications

www.sec.gov/divisions/investment/guidance/im-guidance-update-filing-requirements-for-certain-electronic-communications.pdf


https://www.finra.org/sites/default/files/Notice_Regulatory_15-50.pdf



https://www.sec.gov/files/observations-from-cybersecurity-examinations.pdf


http://www.sec.gov/divisions/investment/guidance/im-guidance-update-filing-requirements-for-certain-electronic-communications.pdf

http://www.sec.gov/divisions/investment/guidance/im-guidance-update-filing-requirements-for-certain-electronic-communications.pdf


SEC Release Nos. 34-58288; IC-28351, Commission Guidance on the Use of Company Web Sites (August 7, 2008)

www.sec.gov/rules/interp/2008/34-58288.pdf

SEC Release No. 34-47806, Electronic Storage of Broker-Dealer Records (May 12, 2003)

www.sec.gov/rules/interp/34-47806.htm

Federal Trade Commission (FTC)

Native Advertising: A Guide for Business (December 22, 2015)

www.ftc.gov/tips-advice/business-center/guidance/native-advertising-guide-businesses

Commission Enforcement Policy Statement on Deceptively Formatted Advertisements (December 22, 2015)

www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf

.com Disclosures, How to Make Effective Disclosures in Digital Advertising (March 2013)

www.ftc.gov/os/2013/03/130312dotcomdisclosures.pdf

United Kingdom, Financial Conduct Authority (FCA)

Finalised Guidance FG15/4: Social media and customer communications, the FCA’s supervisory approach to financial promotions in social media (March 2015)

www.fca.org.uk/your-fca/documents/finalised-guidance/fg15-04

http://www.sec.gov/rules/interp/2008/34-58288.pdf

http://www.sec.gov/rules/interp/34-47806.htm

https://www.ftc.gov/tips-advice/business-center/guidance/native-advertising-guide-businesses

https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf

https://www.ftc.gov/system/files/documents/public_statements/896923/151222deceptiveenforcement.pdf

http://www.ftc.gov/os/2013/03/130312dotcomdisclosures.pdf

https://www.fca.org.uk/your-fca/documents/finalised-guidance/fg15-04

Documents

Welcome Remarks and Current Developments Thursday, October