FINRA is once again focusing on member firms’ communications with the public. Regulatory Notice 13-23 provides members with guidance regarding disclosure of fees in communications about retail brokerage accounts and Individual Retirement Accounts (IRAs).
FINRA has observed that member firms’ marketing campaigns regarding retail brokerage accounts and IRAs often emphasize that fees are not charged. FINRA is concerned that, although broker-dealers emphasize that they do not charge certain fees (for example, rollover fees), they charge other types of fees (for example, fees for opening, maintaining or closing accounts) that might not be disclosed. Failure to disclose fees that they will—or may—charge, particularly in the face of claims that they do not charge fees, may result in communications that are not fair and balanced, and that could be misleading.
FINRA’s Regulatory Notice also cautions that communications featuring prominent claims of “free accounts,” with only a footnote disclosing other fees that may apply, may violate FINRA Rule 2210. FINRA reminds members that information may be placed in a footnote only if such diminutive disclosure would not inhibit an investor’s understanding of the communication.
Before the next IRA marketing campaign or mailing regarding retail brokerage services, FINRA member firms should take the time to remind themselves of FINRA’s expectations regarding such sales materials.