Investment Company and. Variable Contracts Products Principals (Series 26) Practice Exam

What constitutes retail communication, according to the definition provided?

1. Written communication to more than 25 retail investors within a 15-day period

2. Written communication to more than 25 retail investors within a 30-day period

3. Written communication to more than 50 retail investors within a 30-day period

4. Written communication to more than 100 retail investors within a quarterly period

The correct answer is: Written communication to more than 25 retail investors within a 30-day period

The definition of retail communication is formulated based on specific criteria related to the frequency and audience size of the communication. In this case, written communication directed to more than 25 retail investors within a 30-day period is considered retail communication. This definition is important for regulatory purposes as it delineates the boundaries for what must comply with certain rules and regulations governing the securities industry. The reasoning behind using a 30-day period instead of other timeframes is to align with the typical practices in the industry regarding how communications are monitored and deemed as reaching a significant audience. By establishing the threshold at 25 investors, the definition effectively captures communications that could potentially have a broader impact and thus requires adherence to regulations aimed at protecting investors. Understanding the specifics of this definition helps broker-dealers and registered representatives maintain compliance with regulatory requirements when planning their communications with the investing public.