Advertising Workshop (Advertising Track) Tuesday, May 22 1:45 p.m. 2:45 p.m.

Transcription

1 Advertising Workshop (Advertising Track) Tuesday, May 22 1:45 p.m. 2:45 p.m. During this highly interactive and dynamic session, attendees apply advertising rules to several mock advertisements and uncover the hidden concerns. Attendees work in small groups and present their findings to fellow participants, while moderators present the regulatory perspective, clarify any misperceptions and answer questions. Moderator: Anthony Maher Associate Director FINRA Advertising Regulation Panelists: Derek Ashworth Associate Director FINRA Advertising Regulation Kimberly Flanders Principal Analyst FINRA Advertising Regulation 1

2 Advertising Workshop (Advertising Track) Panelist Bios: Moderator: Anthony T. Maher is Associate Director in FINRA s Advertising Regulation Department. He served in a similar role at NASD before its 2007 consolidation with NYSE Member Regulation, which resulted in the formation of FINRA. His chief responsibility is managing staff members dedicated to the routine review of member advertisements. Mr. Maher also speaks at FINRA and industry conferences and events, including the Department s Advertising Regulation Conference, where he conducts a highly interactive educational hands-on advertising review workshop. Prior to joining the NASD in 1995, he was a registered principal and a compliance analyst for a broker-dealer subsidiary of a life insurance company. Mr. Maher holds a J.D. from George Mason University Antonin Scalia Law School, a master s degree from Georgetown University and a bachelor s degree from George Mason University. Panelists: Derek Ashworth is Associate Director in FINRA s Advertising Regulation Department. The department protects investors by ensuring broker-dealer members of FINRA use communications that are fair, balanced and not misleading. Mr. Ashworth s primary responsibility is managing staff members dedicated to the routine review of member firm communications. Mr. Ashworth also participates in the Department s outreach efforts including serving as a panelist in prior FINRA conferences and presenting during selected FINRA Compliance Boot Camps. He has been with the Advertising Regulation Department for 18 years. Prior to joining FINRA, Mr. Ashworth was a program manager for a business and education partnership at Nova Southeastern University in Fort Lauderdale, FL. Previous to this role, he was a specialty banker and registered representative with First Union in West Palm Beach, FL. Mr. Ashworth received his bachelor s degree from Stetson University and completed his M.B.A. at Johns Hopkins University. Kimberly Flanders is Principal Analyst in FINRA s Advertising Regulation Department. She has served in this role since 2002 and joined the Department in Prior to joining FINRA, Ms. Flanders was an investigator for the Resolution Trust Company in Washington, DC. Previous to this role, she was a staff member of the Permanent Subcommittee on Investigations, chaired by the former U.S. Senator from Georgia, Sam Nunn. Ms. Flanders received her bachelor s degree from the University of Georgia. 2

3 2018 FINRA Annual Conference May 21 23, 2018 Washington, DC Advertising Workshop (Advertising Track)

4 Panelists Moderator Anthony Maher, Associate Director, FINRA Advertising Regulation Panelists Derek Ashworth, Associate Director, FINRA Advertising Regulation Kimberly Flanders, Principal Analyst, FINRA Advertising Regulation FINRA Annual Conference 2018 FINRA. All rights reserved. 1

5 Communication #1: Sunset Reflection Fund Magazine Advertisement FINRA Annual Conference 2018 FINRA. All rights reserved. 2

6 Communication #2: Social Media FINRA Annual Conference 2018 FINRA. All rights reserved. 3

7 Communication #3: Newspaper Advertisement FINRA Annual Conference 2018 FINRA. All rights reserved. 4

8 Communication #4: Banner Ad with Landing Page FINRA Annual Conference 2018 FINRA. All rights reserved. 5

9 Advertising Review Workshop

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11 Advertising Workshop (Advertising Track) Tuesday, May 22, :45 p.m. 2:45 p.m. Apply advertising rules to several mock advertisements and uncover the hidden concerns during this highly interactive and dynamic session. Attendees will work in small groups and present their findings to all Workshop participants while moderators present the regulatory perspective, clarify any misperceptions and answer questions. Moderator: Panelists: Anthony Maher Associate Director FINRA Advertising Regulation Department Derek Ashworth Associate Director FINRA Advertising Regulation Department Kimberly Flanders Principal Analyst FINRA Advertising Regulation Department I. Introduction II. Open discussion and analysis among workshop attendees in small groups III. Presentation of small group analyses to full audience IV. Department presentation

12 Communication # 1: Sunset Reflection Fund Magazine Advertisement

13 Do your investments reflect your values? We believe they should. Sunset Reflection Fund The Sunset Reflection Fund is an actively managed mutual fund that follows a sustainable investing approach combining rigorous analysis with equally rigorous environmental, social and governance (ESG) analysis in order to identify investments. Consider the investment objectives, risks, and charges and expenses of the investment company carefully before investing; the prospectus contains this and other information about the investment company; call your financial advisor or visit to obtain a prospectus. Read it carefully before investing. Risk Information: The market price of equity securities may fluctuate significantly, rapidly and unpredictably, causing the Fund to experience losses. The prices of equity securities generally are more volatile than the prices of debt securities. Market Risk Conditions in a broad or specialized market, a sector thereof or an individual industry may adversely affect security prices, thereby reducing the value of the Fund s investments. To the extent the Fund takes significant positions in one or more specific sectors, countries or regions, the Fund will be subject to the risks associated with such sector(s), country(ies) or region(s) to a greater extent than would be a more broadly diversified fund. Companies that issue value securities may have experienced adverse business developments or may be subject to special risks that have caused their securities to be out of favor. The Fund may invest in companies that may not be expected to experience significant earnings growth, but whose securities the investment adviser believes are selling at a price lower than their true value. Companies that issue value securities may have experienced adverse business developments or may be subject to special risks that have caused their securities to be out of favor. If the investment adviser s assessment of a company s prospects is wrong, or if the market does not recognize the value of the company, the price of its securities may decline or may not approach the value that the investment adviser anticipates. The Fund is actively managed. The investment techniques and decisions of the investment adviser and the Fund s portfolio manager(s) may not produce the desired results. As with all mutual funds, investors may lose money by investing in the Fund. Sunset Distributors, LLC Member FINRA & SIPC Sunset Distributors LLC. All rights reserved.

14 Additional Information Filing Information Print advertisement filed with the Advertising Regulation Department on May 4, Published in national financial publications. Date of registered principal approval: May 2, Anticipated date of first use: May 10, Fund Information Open-end actively managed mutual fund. Benchmark: S&P 500 Index. Investment Objective: Seeks long-term growth of capital. Strategy: Bottom-up stock selection is focused on earnings growth consistency, capital discipline, relative valuation and identified catalysts with potential for stock price appreciation. Environmental, Social and Governance (ESG) research is an integral component of securities analysis. Risks: Market risk, including potential loss of principal. Derivatives risk, Non U.S. Securities Risk, Value Securities Risk.

15 Communication # 2 Social Media

16 #tag Compose a new Chirp David Husband. Father. Son. Author and Financial Advisor with Charles Dickens Financial Services LLC Chirps 3,991 Chirps 152 Following 450 Followers David 1 week ago Extreme market volatility continues with no end in sight! I can t stress enough that investors should consult an advisor! #Volatility #Advisors David 1 week ago Looking for an Advisor? I ve got 20 years experience and have $500m+ assets under management. Check my record (or anyone else s) at brokercheck.finra.org. #Brokercheck David 2 weeks ago Excellent article by my friend and self-made millionaire, William Wild Bill Hagy: Smart Money Means Not Losing Money. David 3 weeks ago #Home. #Austin, TX vacation was an adventure! Now it s time to get back to work for my clients! Need to PROTECT and GROW their assets! Not easy in the current tumultuous market! David 4 weeks ago Stock market drops 600 points! Stock market gains 375 points! Rising interest rates cause bond prices to tumble! What to DO? Contact me! I have the experience, education and professional certifications! I can help! #Advice #Protect #Assets David 5 weeks ago Educate yourself about finance and investing. You don t need to be an expert. Just follow expert ADVICE! #Smart #Investing #Funds #Stocks #Bonds #Diversification David 6 weeks ago #Diversify! Diversify! Diversify! Diversifying your investments is vital more than ever with this crazy market. Diversification can help protect you during market downswings and help you earn steadier growth and income over the long-term. David 7 weeks ago With the increasing market volatility, you need to diversify to help protect yourself. And diversification in today s market mean more than stock, bonds or mutual funds. Think real estate/international/alternative investments & strategies. #Diversify #International #Alternative #Strategies 2018 Chirper About Help Careers Privacy Terms Advertisers David 9 weeks ago Stay the course! Don t bail out of the markets because of a little volatility! This is a time to stay invested. Read the article 5 Reasons to Not Sell. Don t ignore history. History shows that markets always rebound sometimes spectacularly!

17 Additional Information Filing Information: David Copperfield is a registered representative and registered investment advisor of Charles Dickens Financial Services LLC. Charles Dickens Financial Services LLC is a registered broker/dealer and registered investment advisor. David Copperfield s personal Chirper page. Obtained during a sweep focused on social media. Chirper page not reviewed or approved by a registered principal of the firm. Chirper page not retained by the firm.

18 Communication #3: Newspaper Advertisement

19 We take the road less traveled. The road to passive investing is getting so crowded that passive investing is becoming less efficient. While we do not dismiss the notion of passive investing, we strongly recommend allocating a portion of your clients portfolios to products that utilize alternative strategies. The Risk Mitigation Strategy Fund is an actively managed fund that uses a long-term strategy designed to take advantage of pricing inefficiencies in the S&P VIX Short-Term Futures Inverse Daily Index (the VIX ). The Fund s strategy provided investors with performance that delivered an average FOUR TIMES the average annual return of the S&P 500 from 2008 through December 31, With this long-term record of outperformance, the Risk Mitigation Strategy Fund should be a part of your clients portfolios. As disciples of diversification, we believe that no one product should dominate an investor s portfolio. But we also believe that diversification should include alternatives to the traditional stocks and bonds. Carefully read before investing the prospectus, which contains important information regarding the Fund s investment objective, risks, charges and expenses. Call for the prospectus. Alternative Fund Distributors LLC. Member FINRA SIPC Disclosures: As with all mutual funds, an investment in the Fund entails risk, including the possibility of a loss of principal. Stocks may fluctuate and bond prices may fall if interest rates rise.

20 Additional Information Filing information: Print advertisement filed April 18, Intended date of first use May 18, Fund information: Inception date: July 1, Investment objective: The Fund seeks capital appreciation and income. Investment strategy: o The Fund will invest in options linked to stock market volatility using a proprietary strategy. o The Fund is expected to have an inverse correlation to the S&P 500 Short Term Futures Inverse Daily Index (VIX). When the VIX is flat or declining, the Fund is expected to have positive returns; When the VIX is increasing, the Fund is expected to have negative returns. o Generally, purchased options are sold to adjust portfolio exposure or when the adviser believes the risk inherent in the investment is greater than the potential reward or when more attractive investments are available. Risks: o The Fund is new and has no operating history. o The Fund is non-diversified and, as such, may be more susceptible to more volatility than a diversified fund. o Risks associated with the use of options and leverage, etc. Fund performance: o Year-to-date: %. o Since inception: %. Benchmark index performance chart illustrates performance from /31/2018.

21 Communication #4: Banner Advertisement with Landing Page

22 Banner Ad Roll Over Your Old 401k to the Maximus IRA It s as easy as ! CLICK HERE TO LEARN MORE!

23 Roll Over Your Old 401k to the Maximus IRA It s as easy as ! Roll Over Your Old 401k to the Maximus IRA in Three Simple Steps: 1. Open Maximus IRA 2. Fund your account 3. Begin building your portfolio Why choose the Maximus IRA? Your investments remain tax-deferred until you withdraw them You will enjoy a wide range of investments to choose from: 7,500 mutual funds and ETFs Stocks, bonds, annuities and other products Access to personal support, on-line tools, resources & services No cost to transfer You will not pay an annual account fee Before investing carefully consider the investment objectives, risks, charges and expenses in the Maximus Funds. This and other important information can be found in the prospectus, which should be read carefully and can be obtained here. There may be alternatives that you should consider before investing in the Maximus IRA. Maximus Financial Services LLC

24 Additional Information Filing information disclosed by firm: Maximus Financial Services LLC filed banner advertisement and landing page on March 31, Date of first use: March 1,2018. Date of registered principal approval: March 15, Prospectus and account information: The Maximus Rollover IRA charges annual maintenance fees, fees for closing or transferring an account, and has fees associated with the investments in the account such as the funds management fees and expenses. The Maximus Funds are no-load but have ongoing management fees and expenses. The Maximus Rollover IRA is offered by Maximus Financial Services LLC. Additional information from analyst research: The banner ad links directly to the landing page. Other than the Maximus Rollover IRA, investors have the option of leaving the money in their former employer s 401(k), rolling over to their new employer s 401(k), or cashing out the account value. Some of these other options involve potentially lower fees and charges than the Maximus Rollover IRA. There may be also be differences among these options in terms of level of service, withdrawal penalties, legal and creditor protections, required minimum distributions, etc. There are varying potential tax consequences associated with the options investors might choose. Maximus Financial Services LLC is a FINRA member firm.

25 Advertising Review Workshop Answers for the Hands-on Sample Communications

26 Communication #1: Magazine Print Advertisement Main concerns: Disclosures: The disclosures appear in a dense and lengthy footnote that may inhibit an investor s understanding of the advertisement and the product being discussed.

27 Communication #2: Social Media Main Concerns: Exaggerated, unwarranted, promissory or misleading claims: Reference and implication that a registered person can Protect and Grow an investor s assets is exaggerated, unwarranted and promissory in that the statement does not reflect the inherent risks and uncertainty of investing. Claim that Diversification can help protect you during market downswings... [emphasis added]is unwarranted and misleading. Procedural concerns: Personal social media Chirper page contains business as such of the broker/dealer, Charles Dickens Financial Services LLC. o Concerns include: Supervision Record keeping Adoption and Entanglement issues: By linking to two specific articles, the broker/dealer has adopted the content of the articles. o Supervision o Recordkeeping Linking to or does not constitute adoption or entanglement as both sites are independent of the broker/dealer. Further, these sites are continually updated and may include information that could be detrimental to the broker/dealer, which has no authority, ability or control to add or remove any content.

28 Communication #3: Newspaper Advertisement Main Concerns: Omission of material information: While the performance chart is accurate through December 31, 2018, it should have been updated to reflect the significant effects of recent market volatility on the Index. No differentiation between the Index strategy and performance and the Fund. Fund s performance should have been disclosed. Risks of the strategy and an investment in the Fund are not disclosed. Mere generic risk disclosures are not sufficient. Footnote concerns: The placement of the risk disclosure at the foot of the advertisement beneath a generic disclaimer may inhibit an investor s understanding of the Fund as it appears to minimize the risks of the Fund and its strategy.

29 Communication #4: Banner Advertisement and Landing Page Main Concerns: Procedural concerns: Failed to file the banner ad and landing page with the Department in a timely manner within ten business days of first use. Failed to obtain registered principal approval prior to use with the public. Omission of material information: Fails to balance claims of You will not pay an annual account fee and No cost to transfer with prominent and proximate disclosure of what fees do apply when opening a new IRA account, maintaining such an account, or choosing an IRA rollover transaction. Fails to disclose that there are options other than an IRA rollover available to the investor and that the investor should carefully consider all options.

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