Broker-dealers were reminded recently to closely supervise all ghostwritten materials their agents distribute to clients in order to rein in any misleading information.
Such materials as defined by FINRA include:
- Hardcover books or pamphlets on investment topics that can be purchased with the representative's name printed on the cover, thereby implying the representative wrote the book or pamphlet.
- Newspaper, magazine, or Web articles where the public might reasonably assume the representative is the author, when this is not the case.
- Interview-style broadcasts, Webcasts, or other public appearances where it appears that an independent third party is interviewing a representative when the interview questions and answers are pre-determined or where the questions and answers were created by or for the representative.
- Handouts in the form of magazines that appear to contain articles written by or about the representative when, in fact, they are produced by a vendor at the request of the representative. In some cases, the representative further misrepresents their credibility by including their photograph next to a photograph of a well-known political or financial figure.
The reminder notice points to NASD Rule 2210, which prohibits false, misleading, or exaggerated communications with the public and the omission of material facts or qualifications that would cause a communication to be misleading. "All communications must comply with principles of fair dealing and good faith. Some of these communications appear to raise serious questions of compliance with these standards."
Registered representatives must remember to avoid insinuating or encouraging others to suggest they wrote materials they did not, FINRA said.
