Testimonials and Endorsements Disclosure Requirements
If a broker-dealer uses a customer testimonial in retail advertising, which disclosure is MANDATORY under securities regulations?
Testimonials must prominently disclose: (1) whether the endorser is a current customer; (2) whether cash or non-cash compensation was paid; (3) material conflicts of interest; and (4) that testimonials do not guarantee future investment performance..
Complete Analysis & Legal Rationale
Testimonials must prominently disclose: (1) whether the endorser is a current customer; (2) whether cash or non-cash compensation was paid; (3) material conflicts of interest; and (4) that testimonials do not guarantee future investment performance.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
Accurately lists mandatory disclosures for retail customer testimonials.
Confidential customer financial records are not disclosed.
The SEC never guarantees or endorses advertisements.
Arbitrary return condition.
Official Standard: Governs compensation disclosures and conflict transparency in testimonials.