Testimonials in Broker-Dealer Advertising: Mandatory Disclosures
A broker-dealer features a video on its public homepage where a retail customer states: 'Thanks to my representative at Apex Securities, my retirement portfolio gained 42% over the last 18 months, exceeding all my financial goals!' According to FINRA Rule 2210, what disclosures must prominently accompany this testimonial?
Testimonials mentioning investment results must disclose: not indicative of future performance, whether paid, and may not represent other clients' experience.
Complete Analysis & Legal Rationale
FINRA Rule 2210(d)(6) mandates that if a retail communication contains a testimonial concerning the investment advice or investment performance of a member or associated person, the communication must clearly and prominently disclose: (1) that the testimonial may not be representative of the experience of other customers, (2) that the testimonial is no guarantee of future performance or success, and (3) if more than $100 in value is paid for the testimonial, the fact that it is a paid testimonial.
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:
Matches the exact three mandatory statutory disclosures required by FINRA Rule 2210(d)(6).
Customer net worth and tax filing status are confidential private data and never disclosed in public advertising.
Tax returns and Form U4 records are not required advertising attachments.
Voluntary statements still require mandatory disclosures to prevent misleading public perception.
Official Standard: Mandates specific disclosure of non-representativeness, no guarantee of future results, and paid compensation details.