Question

"A client receives a $150 gift card from a broker-dealer for giving a testimonial about her highly positive experience with her registered representative. What is the broker-dealer NOT required to disclose if the testimonial is used in a retail communication?"

Answer 1

Answer:

Explanation:

In a scenario such as this one, the broker-dealer is not required to disclose whether any guarantee of growth was made by the representative to induce the giving of the testimonial. This is backed by the FINRA rule on testimonials used in communications which states the following:

“Retail communications or correspondence providing any testimonial concerning the investment advice or investment performance of a member or its products must prominently disclose the following:

• The fact that the testimonial may not be representative of the experience of other customers.
• The fact that the testimonial is no guarantee of future performance or success.
• If more than $100 in value is paid for the testimonial, the fact that it is a paid testimonial.”