[ by Howard Haykin ]

FINRA has amended NASD Rule 1022(g) (Limited Principal—General Securities Sales Supervisor), and NASD IM-1022-2 (Limited Principal—General Securities Sales Supervisor), to remove the restriction on General Securities Sales Supervisors from approving advertisements as defined in NASD Rule 2210 (Communications with the Public).  The rule changes became effective Monday, 2/4. 

NASD Rule 1022(g) expressly prohibits a General Securities Sales Supervisor from performing any of the following activities:

• supervision of the origination and structuring of underwritings;
• supervision of market making commitments;
• *  final approval of advertisements as defined in NASD Rule 2210;
• supervision of the custody of firm or customer funds or securities for purposes of SEA Rule 15c3-3 (Customer Protection—Reserves and Custody of Securities); or,
• supervision of overall compliance with financial responsibility rules.

Note: *   While GS SalesSupervisors currently are prohibited from approving “advertisements,” they may approve “sales literature” relating to most types of securities.

Why FINRA Made The Change.   When FINRA adopted FINRA Rule 2210, Communications with the Public, principally from NASD Rule 2210, it combined the definitions of advertisement, sales literature and independently prepared reprint into a single category - retail communications.  Advertisements no longer are viewed as a separate category of communications - simply because modes of communication have largely rendered obsolete the distinction between sales literature and advertisements.  Accordingly, sales literature and advertisements generally are subject to the same content standards under NASD Rule 2210.

- e.g.,  information in a blast email sent to a thousand prospective customers currently would be considered sales literature;  the same information posted to a firm’s website would be considered an advertisement. 

Today's rule change brings the rule provisions of NASD Rule 1022(g) and NASD IM-1022-2 in sync with those of FINRA Rule 2210 - as they pertain to supervision of advertisements and sales literature. 

For further details, go to:  [FINRA Rule Filing 13-14, 2/1/13].