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INSTITUTIONAL COMMUNICATIONS

Intuitional communication is denned as any written communication distributed or made available exclusively to institutional investors. The communication may be distributed in hard copy or in electronic formats. Institutional communications do not have to be approved by a principal prior to first use so long as the member has established policies and procedures regarding the use of institutional communications and has trained its employees on the proper use of institutional communication. Institutional communication is also exempt from FINRA's filing requirement, but like retail communications, it must be maintained by a member for three years. If the member believes that the institutional communication or any part thereof may be seen by even a single retail investor, the communication must be handled as retail communication and is subject to the approval and filing requirements of a retail communication. An institutional investor is a person or firm that trades securities for his or her own account or for the accounts of others. Institutional investors are generally limited to large financial companies. Because of their size and sophistication, fewer protective laws cover institutional investors. It is important to note that there is no minimum size for an institutional account. Institutional investors include:

• Broker dealers

• Investment advisers

• Investment companies

• Insurance companies

• Banks

• Trusts

• Savings and loans

• Government agencies

• Employment benefit plans with more than 100 participants

• Any non-natural person with more than $50,000,000 in assets

CORRESPONDENCE

Correspondence consists of electronic and written communications between the member and up to 25 retail investors in a 30-day period. With the increase in acceptance of email as business communication, it would be impractical for a member to review all correspondence between the member and a customer. The member instead may set up procedures to review a sample of all correspondence, both electronic and hard copy. If the member reviews only a sample of the correspondence, the member must train its associated people on the firm's procedures relating to correspondence and must document the training and ensure that the procedures are followed. Even though the member is not required to review all correspondence, the member must still retain all correspondence. The member should, where practical, review all incoming hard copy correspondence. Letters received by the firm could contain cash, checks, securities, or complaints.

 
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