Prudential Retirement Compliance MARKETING REVIEW GUIDE Advertising Policies, Procedures, and Disclosures

Transcription

1 Prudential Retirement Compliance MARKETING REVIEW GUIDE Advertising Policies, Procedures, and Disclosures For Internal Use Only 1

2 OVERVIEW Purpose of Manual Welcome to the 2008 edition of the Prudential Retirement Compliance Marketing Review Guide. This guide is designed to assist you in creating effective marketing sales and advertising material that complies with the marketing review policies of Prudential Retirement and the requirements set forth by federal and state industry regulators. We hope that you will find the manual to be a helpful, easy-to-use reference tool. Prudential Retirement Compliance policies, procedures, and responsibilities are detailed within. Both submitters and their Supervisory Principals will find specific information relating to their responsibilities. In addition to reading and referencing this guide, we ask that you use the Prudential Retirement Compliance and PIMS databases as resources. The Marketing Review staff is here to offer any guidance you may need in creating materials to use in your marketing efforts and to answer your questions regarding Marketing Review policies and procedures. Please feel free to contact us with your comments or suggestions so that we may continue to provide you with the information you need in the most efficient manner possible. The Manual will be periodically updated as necessary to ensure it is current and responsive to changing regulations and business conditions. All registered representatives, their Supervisory Principals and other submitters of marketing sales and advertising materials, should read and become familiar with the information contained in the Manual that applies to their productrelated activities. Prudential Retirement Its Client Market, Products, and Services Prudential Retirement delivers retirement-plan solutions for public, private, and nonprofit organizations. The market includes retirement-plan providers and their participants in 401(k), 403(b), 457 plans. Services offered include record-keeping, administrative-support, investmentmanagement, comprehensive employee investment education and communications, and trustee services. With over 80 years of retirement experience, Prudential Retirement meets the needs of over two million defined contribution participants and more than six hundred thousand defined benefit participants and annuitants. Products offered in the qualified and nonqualified retirement-plan markets include registered mutual funds, insurance-wrapped, and stable-value products. For Internal Use Only 2

3 Mission Marketing Review The Prudential Retirement Compliance Marketing Review Unit s mission is to review and approve sales material, advertising, internal training ( Sales Materials ) regarding broker/dealer and insurance company products and services as required by applicable laws, regulations, and Company policy. For Internal Use Only 3

4 MARKETING REVIEW PROCESS and PROCEDURES Material That Must Be Submitted for Compliance Marketing Review Procedures Responsibilities Policy/Rule The Marketing Review Unit is responsible for reviewing and approving marketing sales material, advertisements, independently prepared reprints, and certain institutional sales material. All marketing sales material and advertising intended for distribution to more than one retirement-plan prospect, client, participant, etc. must be submitted for review and approved by a Compliance Marketing Review unit Supervisory Principal (the Compliance Analyst). Material That Must Be Submitted for Compliance Marketing Review Material Intended for Use with the Public The majority of Prudential Retirement materials are directed toward plan sponsors and their participants. Materials include any written or electronic communication, independently prepared reprint, and institutional sales material that is generally distributed or made generally available to customers or the public. Examples circulars, research reports, market letters, performance reports or summaries, form letters, telemarketing scripts, seminar texts, reprints (that are not independently prepared reprints) or excerpts of any other advertisement, sales literature or published articles, and press releases concerning Prudential Retirement s products or services. Should you question whether material should be submitted to compliance please contact the marketing review team. Institutional Sales Material Institutional Sales Material consists of any communication that is distributed or made available only to institutional investors employee benefit plans that meet the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and have at least 100 participants, but does not include any participant of such a plan. If the communication or any excerpt thereof will be seen by any person other than an institutional investor, the material is no longer considered communication with institutional For Internal Use Only 4

5 investors. For Prudential Retirement, generally institutional investors are comprised of existing and potential retirement-plan providers. If there is reason to believe that such communication would be forwarded or made available to plan participants or other beneficiaries of institutional accounts, it will be treated as sales material. Similarly, an advertisement in a publication designed for broker/dealers or other institutional investors may not be treated as institutional sales material if there is reason to believe that the publication will be made available to any person other than an institutional investor. Advertisements Any material, other than an independently prepared reprint and institutional sales material, that is published or used in any electronic or other public media, including any Web site, newspaper, magazine or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboards, motion pictures, or telephone directories (other than routine listings). Training Material Product-related material used for training and education (including presentations to be given by outside speakers) that is designed to be used to induce the public to purchase, increase, modify, reinstate, borrow on, surrender, replace or retain an insurance product, annuity contract, or mutual fund. Electronic Communications Marketing sales material and advertising transmitted electronically through Company-approved and web sites. Software Software packages typically contain, but are not limited to, representations and comparisons of various scenarios, hypothetical projections and information concerning tax and/or legal matters. As such, Company-approved software and its output are considered sales and marketing material and are subject to prior review and approval by Marketing Review. Public Appearances Participation in a seminar, forum (including an interactive electronic forum), radio or television interview, or other public appearance or public speaking activity. Independently Prepared Reprints Defined as any reprint or excerpt of any article issued by a publisher, provided that: For Internal Use Only 5

6 The publisher is not an affiliate of the broker/dealer using the reprint or any underwriter or issuer of a security mentioned in the reprint or excerpt and that the broker/dealer is promoting; Neither the broker/dealer using the reprint or excerpt nor any underwriter or issuer of a security mentioned in the reprint or excerpt has commissioned the reprinted or excerpted article; and The broker/dealer using the reprint or excerpt has not materially altered its contents except as necessary to make the reprint or excerpt consistent with applicable regulatory standards or to correct factual errors. Independently prepared reprints also include any report concerning an investment company provided: the report is prepared by an entity that is independent of the investment company, its affiliates, and the broker/dealer using the report (the "research firm"); the report's contents have not been materially altered except as necessary to make the report consistent with applicable regulatory standards or to correct factual errors; the research firm prepares and distributes reports based on similar research with respect to a substantial number of investment companies; the research firm updates and distributes reports based on its research of the investment company with reasonable regularity in the normal course of the research firm's business; neither the investment company, its affiliates nor the broker/dealer using the research report has commissioned the research used by the research firm in preparing the report; if a customized report was prepared at the request of the investment company, its affiliate or a broker/dealer, then the report includes only information that the research firm has already compiled and published in another report, and does not omit information in that report necessary to make the customized report fair and balanced. Article reprints and research reports that do not meet the definition of "independently prepared reprint" constitute sales literature. Procedures Special Routing Prior to Marketing Review In certain instances, sales and marketing material must be sent to other departments, (such as Product, Tax, or Law), before submitting for Marketing Review. For example, tax sign-off is required on any piece that contains (or should contain) tax information. Materials that introduce a new product or services, discuss major product enhancements, or provide detailed information about sophisticated sales or tax concepts and strategies may require sign-off from Product, Tax, and/or Law prior to submitting to Marketing Review. Compliance Marketing Review should follow all other required reviews. For Internal Use Only 6

7 Submission Electronically submit Retirement Marketing Sales Materials or Advertising to the Compliance Marketing Review Unit via the Marketing Materials Mall (MMM) icon. Open the mall, click submit, select Retirement Services, which then opens to the Control top sheet. It is important to accurately and thoroughly complete the top sheet. Submitter/Creator Responsibility Upon completion of the top sheet, select the button for Supervisory Principal (SP) review and approval of the materials. In the comment section of the top sheet: Identify information sources. Identify similar, already-approved materials INST Control Number and edition. Indicate any additional approvals given to the material (e.g. Law, Tax, Product, etc.). For tax-related items, include in the comment section the tax reference number and the name of the Tax Marketing Reviewer. Non-electronic (hard copy) Submissions If an electronic file of the material is not available, submit the material by: Completing and submitting the top sheet (all fields should be complete except for the attachment field) Printing the top sheet, and Faxing the top sheet and the material to the 800 number on the top sheet. When faxed to the 800 number, the material is then converted into an electronic file and deposited in the MMRS inbox queue. Control Number and Edition Date. The Marketing Material Review System (MMRS) will assign a Control Number to all materials for tracking purposes. The entire code must appear on all approved pieces. Generally the full code is placed on the first page, lower-left corner or on the last page or back cover. Example: INST A First part reflects the prefix used by Compliance to identify materials reviewed Second part reflects the date of approval in year/month/day format Third part is a unique number assigned to each individual piece For Internal Use Only 7

8 Material Return to Submitter and Assigned Status Marketing Review strives for an average turn-around time of five business days, electronically returning materials via the MMRS. Please take this into consideration when planning the distribution of materials. Review status can be found on the return top sheet. Status categories are: Approved. The material can be used as is. No changes can be made to the piece without Marketing Review approval. Approved With Changes. The material can be used after incorporating all of the changes indicated by the marketing reviewer. No other changes can be made to the piece without Marketing Review approval Revise and Resubmit. The material may not be used until Marketing Review approves it. All the changes indicated by the marketing reviewer are to be made and the material resubmitted to Marketing Review for approval. Material describing investment products and services may require filing with a regulator such as the FINRA and/or state departments of insurance. The Compliance Marketing Review unit will determine whether marketing material needs to be filed with a regulator, and will require that all necessary revisions be made prior to filing and use. Not Subject to Marketing Review. Approval from the Marketing Review Unit is not required prior to use. Example: material that is clerical and administrative in nature. Rejected. The material MAY NOT be used. Expiration Policy Generally, material may be used for a period of 18 months from the date of approval. If the material is to remain active beyond 18 months, the submitter must initiate an Expiration Review. Materials discussing performance have a shorter expiration period generally to quarter end unless the material is approved as a template. Final Copies Materials assigned the status, Approved or Approved with Changes must be returned within 30 days to the MMRS database via the Marketing Materials Mall. It is management s responsibility to ensure the final copy is submitted by the agreed upon date. If, by 30 days, the material is still not ready for use, the submitter should give Marketing Review the anticipated date the final copy will be available. If the final is not received within a reasonable time after its due date, it may be disapproved. At that point, subsequent submissions will be directed to the final-copies violators inbox thereby blocking the submitter s materials from further review. Delinquent submitters may be subject to disciplinary action, including restrictions on the privilege of submitting material in the future, probation, or termination. For Internal Use Only 8

9 Changes to materials Generally, changes may not be made to materials once Compliance Marketing Review completes a review. However, it is relevant to differentiate between nonmaterial, minor changes and substantive changes. Management review and discretion regarding all changes is required. Any substantive change requires Compliance re-review. "Substantive change" is not defined anywhere in the rules; a precise and exhaustive definition to cover all possibilities does not exist. Following are examples that could be considered "substantive" changes. a change to the audience for the material (e.g., plan sponsors to plan participants) a change in the method of distribution of the material (e.g., paper to web-based) addition or deletion of the types of products being described (e.g., adding mutual funds) significant change to the format of the presentation (e.g., moving page 1 substantive information to page 2) addition/deletion of significant information from the material (e.g., removal of fund's objectives) addition/deletion of charts, graphs or other visual presentations addition/deletion or movement of footnoted information or other disclosures addition or modification to promotional banners, titles, etc. involving Prudential's products or services addition, removal or modification of words or phrases used to describe investment products or services Non-substantive changes, which do not require Compliance Marketing review, may at times be made to materials without Compliance Marketing Review. A non-substantive change is outside the context of product discussion. Keep in mind that there are times when a single word, such as insertion of the word not, may be considered a material change by greatly impacting the investment product or service. Examples of changes not requiring resubmission include: Changing trivial words not related to the product ( However is changed to Therefore). Change in the plan vesting schedule An update to citations for data, etc. Materials treated as templates For Internal Use Only 9

10 At times it is appropriate to develop a master template having variable fields that can be populated in brackets. Templates have limited language that changes the message is the same, the specifics for each situation are different. Examples of templates include: A presentation to different clients within the same 403(b) market, form letters, performance updates, fund-mapping letters. Changes in brackets might be client name, date, specific performance data, or specific client or participant information. When developing templates, keep the following in mind: Use brackets to designate those areas containing variable language. Only bracketed areas may change; all other verbiage must remain as originally approved. When completing the submission top sheet for a template, insert the word Template in the Comment section. A Supervisory Principal may need sign off on each subsequent iteration of template material. If just a client name and/or date changes, SP sign off is not needed. However, if new investment options populate the fields, the Supervisory Principal will need to sign off to ensure that proper disclosure complies with changes. SP-approved variations of the template do not need Compliance Marketing Review. Code each variation of a template so that it may be clearly differentiated and controlled. Maintain all variations of templates in a file. Materials that do not constitute templates While materials often serve as a foundation for the development of other materials, unless the original is officially a template (with only bracketed areas changed), the subsequent material must also receive Compliance Marketing Review. It is not appropriate to create one massive, catch-all template. Littering material with myriad, bracketed, what-if statements is not acceptable. It may instead be necessary to develop several templates to cover all bases. There is no such thing as approved verbiage (or canned language) and corresponding disclosure that can be joined together to create marketing material without requiring Compliance Marketing Review. Even though the marketing material may be comprised of several different formerly approved paragraphs, etc. it becomes a wholly new piece that requires Marketing Review in the new context. For Internal Use Only 10

11 Responsibilities Supervising Principals SP sign-off evidences that the material is suitable for the targeted audience, has been reviewed by all other areas (legal, tax, etc.) as appropriate, and is compliant with securities and/or insurance regulations. Ensure the quality and accuracy of sales and marketing materials distributed from your department Understand and comply with the policies and procedures discussed in this guide Communicate these policies and procedures to registered representatives and associates Review materials against these policies and procedures prior to submission for Compliance Marketing Review Verify that all required changes, and no others, are made Ensure that the INST code and edition date are on material Ensure the return of final copies of approved marketing material within the appropriate timeframe Prior to expiration, approve resubmitted materials for Marketing Review, as appropriate Ensure that pieces are used in an appropriate manner and are not misleading or confusing to the audience Ensure final copy sent to Marketing Review is the same as the actual copy used Maintain proper files Ensure the re-review of materials receiving substantive change (defined above). Submitters Review, understand, and comply with the policies and procedures discussed in this guide prior to submitting for Compliance Marketing Review Use material that is suitable for the intended audience is not misleading or confusing Assume responsibility for the quality and accuracy of materials you submit Secure needed supplemental reviews prior submitting for Compliance Marketing Review (legal, tax, client etc.) Prepare the Control Top Sheet correctly, indicating manager approval required Resubmit approved materials to your principal and Marketing Review prior to expiration Incorporate Compliance Marketing Review s required revisions Include the full INST code on all material For Internal Use Only 11

12 Incorporate all Compliance Review comments on materials; make no other changes to material Forward final copies to Marketing Review within 30 days of review Maintain proper files, and Only distribute approved material. Compliance Marketing Review Ensure the material complies with the content standards listed in the Marketing Review Guide. Approve Marketing Sales Material and Advertising Ensure timely filing of sales material with regulatory authorities For Internal Use Only 12

13 COMMON REQUIREMENTS for MARKETING SALES and ADVERTISING MATERIALS Standards Applicable to All Communications with the Public Standards Applicable to All Communications with the Public Content Standards Legal, Tax, Accounting Information and Disclosure Broker/Dealers, Non-Broker Dealers and Individuals Record Retention Limitations on Use of FINRA Name Internal Use Only, Plan Sponsor Use Only, & Financial Professional Use Only Special Situations Policy Materials relating to registered products are reviewed in light of FINRA and SEC regulations. Likewise nonregistered products (separate accounts, etc.) are also reviewed following the spirit of the standards for regulated products. Standards Applicable to All Communications with the Public Misleading Material All communications with the public shall be based on principles of fair dealing and good faith, must be fair and balanced, and must provide a sound basis for evaluating the facts in regard to any particular security or type of security, industry, or service. Materials may not omit material fact or qualification if the omission, in the light of the context of the material presented, would cause the communications to be misleading Marketing sales material and advertising may not make any false, exaggerated, unwarranted or misleading statement or claim. No member may publish, circulate or distribute any public communication that the member knows or has reason to know contains any untrue statement of a material fact or is otherwise false or misleading. Context and Audience The audience must be considered when creating marketing material. Different levels of explanation or detail may be necessary depending on the audience. Prudential Retirement targeted audiences run the gamut from plan sponsor to participant, financial professional to internal use only. Writers must remember that it is not always possible to restrict the audience when creating marketing material. Additional information or an entirely different presentation may be required depending upon the medium used for a particular communication and For Internal Use Only 13

14 the possibility that the communication will reach a larger or different audience than the one initially targeted. Footnotes Including information in a footnote is not a substitute for well-crafted, informative and accurate marketing material. Information relevant to understanding the subject may not be buried in footnotes. Information may be placed in a legend or footnote only in the event that such placement would not inhibit an investor's understanding of the communication. Footnotes should appear in close proximity to the language clarified and should always appear on the same page as the text referenced. In situations where footnotes are appropriate, they must be printed in at least 8-point type. For example, footnotes in especially small type in an advertisement might be deemed to inhibit an investor's understanding of the advertisement. Similarly, an advertisement that presents bold claims that are supposedly "balanced" only with footnote disclosure would not comply with this content standard Footnotes included in material distributed in Florida and Utah must be the same size as the body of the advertisement. Predictions or projections Communications with the public may not predict or project performance, imply that past performance will recur or make any exaggerated or unwarranted claim, opinion or forecast. A hypothetical illustration of mathematical principles of how money might grow is permitted, provided that it does not predict or project the performance of an investment or investment strategy. In that instance, the compounding disclosure may be needed. The compounding concept is hypothetical and for illustrative purposes only and is not intended to represent performance of any specific investment, which may fluctuate. No taxes are considered in the calculations; generally withdrawals are taxable at ordinary rates. It is possible to lose money by investing in securities. If any testimonial in a communication with the public concerns a technical aspect of investing, the person making the testimonial must have the knowledge and experience to form a valid opinion. The following disclosure may be needed for testimonials. This testimonial may not be representative of the experience of other participants and is not indicative of future performance or success. Content Standards Comparisons Material must not deceive or mislead the public. Any comparison in advertisements or sales literature between investments or services must disclose all material differences, For Internal Use Only 14

15 including (as applicable) investment objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, and tax features. Claims and statements must have a factual basis. The purpose of product comparisons must be clear, fair and balanced. Some examples include investment objectives, sales and management fees, liquidity, safety, guarantees or insurance, fluctuation of principal and/or return, tax features. Comparisons must not attempt to be forward looking. It is inappropriate to compare the rates of return of dissimilar products comparisons should be in terms of apples to apples; not apples to oranges. (Examples: stable value should not be compared with money market, etc.; a nine-month historical rate may not be compared to a crediting rate.) If the client requests an unusual comparison, do not promise the comparison, but rather state that we would like to go back to the product person to explore further. Disparaging Remarks An advertisement shall not disparage other retirement-plan providers, competitors products, insurance producers, services or methods of marketing. Print Advertisements Proximity requirements are intended to help investors more readily find information necessary to understand and evaluate the performance data shown, and to remind investors of the limitations of performance data. Performance disclosures must be in close proximity to the performance data and is required to appear in the body of the advertisement and not in a footnote. The required prospectus (for registered securities products) and performance disclosures in a type size at least as large as and of a style different from, but at least as prominent as, that used in the major portion of the advertisement. Exception: When performance data is presented in a type size smaller than that of the major portion of the advertisement, the performance disclosure may appear in a type size no smaller than that of the performance data. Electronic Medium If an advertisement is delivered through an electronic medium, the type size and style requirements may be satisfied by presenting the required performance and prospectus disclosures in any manner reasonably calculated to draw investor attention to them. Radio and Television Must give the required narrative disclosures emphasis equal to that used in the major portion of the advertisement. For Internal Use Only 15

16 The required performance and prospectus disclosures are not considered to be of equal emphasis if they are in written form while the major portion of the advertisement is spoken. If the required disclosures appear in writing on a television screen during a spoken advertisement, they are more likely to be overlooked, and not seen as a significant part of the advertisement, than if they are included in the spoken presentation of the advertisement. The performance disclosures should appear immediately before, immediately after, or briefly separated from the performance information. Legal, Tax, Accounting Information and Disclosure Marketing material can provide general information about the impact of taxes on various retirement scenarios or advanced planning concepts, but neither Prudential Retirement nor its representatives render tax or legal advice. Prudential Retirement does not offer financial planning or financial-planning advice. Materials that might allude to such should clearly disclose that the person representing the material is not a financial planner (if their name is part of the presentation) and does not offer financial planning advice. Example: [First name, last name] is not a financial planner and does not offer financial planning advice. The appropriate legal or Tax Marketing reviewer must first review communications that deal with tax or legal matters. After legal or tax-marketing review comments are incorporated, material may then be submitted for Compliance Marketing Review. The following, or a substantially similar, disclosure may be relevant: Neither Prudential nor any of its representatives are tax or legal advisors and encourage you to consult your individual legal or tax advisor with any specific questions. This disclosure alone may not be appropriate for all marketing material. Additional disclosure may be needed depending on the complexity of your material. Broker/Dealers, Non-Broker Dealers and Individuals All advertisements and sales literature must: Prominently disclose the name of the broker/dealer and may also include a fictional name by which the member is commonly recognized or which is required by any state or jurisdiction; Reflect any relationship between the broker/dealer and any non-broker/dealer or individual who is also named; and For Internal Use Only 16

17 If it includes other names, reflect which products or services are being offered by the broker/dealer. Record Retention All advertisements, sales literature, and independently prepared reprints must be maintained in a separate file for a period of three years from the date of last use. The file must include the name of the registered principal who approved each advertisement, item of sales literature and the date that approval was given. Submitters must maintain information concerning the source of any statistical table chart, graph or other illustration used by the member in communications with the public. Limitations on Use of FINRA Name Members may indicate FINRA membership in any communication with the public, provided that the communication neither states nor implies that FINRA or any other regulatory organization endorses, indemnifies, or guarantees the member's business practices, selling methods, the class or type of securities offered, or any specific security. Internal Use Only Plan Sponsor Use Only and Financial Professional Only Use Material The way material is presented to sales professionals and plan sponsors will determine how it is subsequently presented to the public. Therefore internal-use materials that present product benefits should: Discuss risks and, whenever possible, indicate where more complete information may be obtained (prospectus or enrolment kits, etc.). Internal materials that can be reasonably expected to communicate to prospective investors or are designed to be employed either in writing or orally in the sales process require similar legal disclosures as those required for use with the public Restricted materials should be clearly and prominently labeled as "Internal Use Only, For Financial Professional Use Only. or Plan Sponsor Use Only. Restricted materials may not be used with the public. Failure to comply can result in disciplinary action or termination. (Remember that Plan Sponsor Use Only material does not include plan sponsors of plans with fewer than 100 participants. Plan sponsors having fewer than 100 participants are treated the same as participants.) Special Situations You are strongly encouraged to submit materials before use. However, circumstances will arise occasionally when it is impossible to have certain Internal Use Only material approved prior to use because it is so time sensitive. In these situations, you must obtain the approval from your Supervisory Principle prior to use. Keep in mind that this process should be used on a very limited basis. For Internal Use Only 17

18 Please contact Marketing Review to determine if your situation can qualify for this type of process handling. Please make sure such materials are clearly labeled "Internal Use Only and deliver these materials to Marketing Review as soon as possible after use. After reviewing such Internal Use Only material on a post-facto basis, Marketing Review will proceed in one of the following ways: Approve the material as is Approve the material, provided noted revisions are incorporated prior to the next use or Require the material be revised and redistributed For Internal Use Only 18

19 REGULATORY FILING REQUIREMENTS of ADVERTISING and SALES MATERIAL Scope Procedures o Material requiring regulatory filing o FINRA filing procedures o Supervisory Procedures Exhibit A FINRA Filing Requirements for Various Materials Policy/Rule File all advertising and sales literature involving investment and insurance products ( Sales Material ) meeting the requirements of FINRA Conduct Rule 2210 and/or any applicable state insurance regulations within the timeliness requirements of each regulator. Currently, FINRA Conduct Rule 2210 requires submission to the FINRA Advertising Department within ten (10) calendar days of first use. There are no similar filing timeliness standards imposed by the two state insurance departments which require that group annuity Sales Materials be filed (i.e., Oklahoma and Mississippi). Failure to obtain Marketing Review approval of sales material prior to its use or distribution will be addressed under the Company s Discipline & Sanctions Policy. In addition to the timeliness of filing, Prudential Retirement s Policy has the following requirements: All Sales Materials must be approved, in writing, by a designated Registered Principal prior to use and prior to filing with a regulator. For purposes of such approval, Registered Principals on the Prudential Retirement Compliance Marketing Review Staff are responsible for review and approval of Sales Materials. All records related to the review and approval of Sales Material are required to be retained as required by the FINRA; namely, they must be maintained in a separate file for a period of three years from the date of last use. The file must include the name of the registered principal who approved each advertisement, item of sales literature, and independently prepared reprint and the date that approval was given. Final copies of all materials are required to be submitted and retained prior to any approval (and subsequent submission to a regulator). For Internal Use Only 19

20 Scope This Policy applies to all Sales Material developed for use by any of Prudential Retirement s sub-business units, including: Sales Materials developed at the request of clients, but used under a client s name Any Sales Material that is substantially developed and/or used by Prudential Retirement associates, regardless of the source of its authorship. Procedures Upon submission of Sales Material to Compliance through the Marketing Material Review System (MMRS), the Compliance Marketing Review Analyst will review the material. Among the information supplied by the Submitter is the intended Date of First Use. The Date of First Use is defined as the date that the material is approved for use. The Marketing Review Unit s Approval Date is defined as the date that the Marketing Reviewer determines that the material is in good order and is in the final format for distribution, printing, etc. While reviewing the material, the Marketing Review Analyst also makes a determination regarding the need to file the Sales Material with a regulator. The Marketing Reviewer will place a notification on the sales material that indicates that FINRA filing is required. After reviewing the Sales Material, the Marketing Review Analyst requests any necessary changes and/or information, and communicates this information to the Submitter via the status, Revise & Resubmit. The Submitter is then required to make the requested changes and/or provide the requested information prior to the material s approval for use. The Submitter s Supervisory Principal will be required to review the changes requested and to verify that the changes were made properly. When resubmitting incorporated changes to Marketing Review, SP review and approval is once again required. If a Final copy is not received within 30 days of the approval date, the Submitter will be blocked from further review not be allowed to submit additional materials for review. The Marketing Review Analyst will change the status of the sales material to Disapproved and will follow up with the Submitter and the applicable Supervisory Principal to obtain the Final copy. On a monthly basis, the Marketing Review Analysts will follow up with the Submitters Supervisory Principals to obtain the outstanding Final copies, and to validate that use of Disapproved materials has been discontinued. The results of these follow up procedures will be documented in MMRS and any infractions will be brought to the attention of the marketing review manager who will perform appropriate follow up with senior management as deemed necessary. Failure to comply with the Final-copy requirements for sales material is subject to the Company s Discipline & Sanction Policy. For Internal Use Only 20

21 Material requiring regulatory filing has any of the following characteristics: Discusses registered securities products or registered insurance products, has never been filed previously, and is intended for use with non-erisa 403(b) plan sponsors or their participants; and any retirement plan (i.e., IRC 401(k), 457, etc.) with less than 100 participants. Discusses registered securities products or registered insurance products, has never been filed previously, and is intended for mass media usage; that is, an uncontrolled audience such as television, radio, print media, publicly accessible websites, etc. For any materials filed with a regulator, the Submitter must also validate the Date of First Use when supplying the Final version of the document. The Marketing Review Analyst will send an to the Submitter s Supervisory Principal notifying them of the decision to file. Supervisory management is responsible for monitoring compliance with the affected Policy requirements. If regulatory filing is required, the Compliance Marketing Review Analyst will determine from the MMRS top sheet the intended date of first use and confirm that date with the Submitter. The Analyst will then initiate FINRA and/or state insurance filing procedures: For FINRA filing purposes, Sales Material meeting the above requirements will be immediately filed (on same date as Approved status is assigned) with the FINRA as required under FINRA Conduct Rule 2210 [See Exhibit A as a reference for Sales Materials and their requirement to file.]. For state Department of Insurance filings, the material will be forwarded to the Contracts area for filing. The Analyst will follow up with the Contracts area to 1) confirm that the filing was submitted, and 2) whether any comments have been received from the regulator. FINRA filing procedures: The Compliance Marketing Review Analyst will electronically file materials with the FINRA by using the FINRA Advertising Regulation Electronic Filing System (a webbased system). The Marketing Analyst completes the FINRA s electronic New Communication top sheet with the required information (e.g., name of material, date of first use, etc.). Once submitted, the FINRA s Advertising Department conducts its review and issues to the Marketing Review Analyst both an notification and hard-copy letter of the FINRA Analyst s review comments. The Marketing Review Analyst reviews the FINRA s comments and records receipt of the review in MMRS. o If Revisions are Necessary, the Marketing Review Analyst forwards the FINRA letter to the submitter. Upon subsequent printing, revisions must be incorporated. o If comments are broad in scope, staff meetings and/or broad-based communications are initiated since there may be impact to on-the-shelf, or future, Sales Material. For Internal Use Only 21

22 o If the FINRA Comment Letter requires that material be reprinted or substantially corrected, the Marketing Review Analyst will follow-up with the Submitter to initiate appropriate follow-up action, and will obtain written confirmation from the Submitter s Supervisory Principal that the sales material has been revised, the date on which it was revised, and that the previous approved version of the sales material has been discontinued from use. o The Manager of the Marketing Review function will review all FINRA comment letters and ensure that all changes are communicated to Submitters and are incorporated into approved materials as required. The MMRS Top sheet is completed with the FINRA information (date of review, comments, etc.) and the FINRA Comment Letter is attached to the AMRP Binder for record retention purposes. All sales material, regardless of regulatory filing decision, is subject to the Company s eighteen (18) month expiration policy. Submitters and their Supervisory Principal s (or their delegates) are required to ensure compliance with this requirement. Supervisory Procedures Describes the process by which the Compliance Supervisor determines and documents that the procedures described in the SOP have been followed. Also describes the steps to be taken when the procedures have not been adequately followed or did not detect/prevent a prohibited practice or policy violation. The following is required: Ensuring that all Sales Material for Registered Investment Company products is approved by a Designated Principal prior to use: o Supervisory management is responsible for monitoring compliance with this requirement. o This requirement will be reviewed as part of the Marketing Review Examination Protocol. Ensuring that Sales Material requiring regulatory filing are filed timely: o Marketing Review supervisory management is responsible for monitoring compliance with this requirement. As regulatory filing determination is made, the material s reference number, approval date and filing date will be added to a Regulatory Filing Spreadsheet, which is maintained on a shared drive. o The MR Manager will review the Regulatory Filing Spreadsheet to verify that such filings are made timely. Follow up with the Analyst will be performed for any filing item aged to five (5) days or over. o The MR Manager will also review a weekly FINRA Filing Report from the AMRP system that identifies the material requiring filing, their approval and filing dates. The manager will review regulatory filings at or over 10 days and perform appropriate follow up. For Internal Use Only 22

23 o The MR Manager will also review a sample of the sales materials listed on the Securities Materials Not Filed Report to verify that appropriate FINRA or state filing decisions were made by the MR Analysts. Any materials requiring filing will be promptly filed and brought to the attention of the applicable Analyst. o The Manager of the Marketing Review function will conduct periodic validations of the information in this report in conjunction with the Marketing Review Examination Protocol. Ensuring that required changes to Sales Material are made prior to use: o Need affirmation of date of first use and prior receipt/review of Final copy Ensuring that all Regulator s comments are incorporated into Sales Material approved for use: o Review of FINRA Comment letters and MR verification that changes is made. o Confirmation from Submitter and Principal that changes were incorporated prior to use. o The Marketing Review manager s analysis and review of FINRA and/or state insurance department comment letters. o This requirement will be reviewed as part of the Marketing Review Examination Protocol. Ensuring that final copies of Sales Material and all relevant supporting documentation are received and retained as required: o The Final Copy process utilized requires that all Final copies be received within 30 days of approval; else the material is discontinued. o MR management review of Finals reports. o Notification to Submitters Principals of outstanding Final copies. Ensuring that all inactive Sales Material is reflected as such in the MMRS system: o This requirement will be reviewed as part of the Marketing Review Examination Protocol. Ensuring that all expired (i.e., >18 months after approval) and all stale-dated Sales Material is no longer used: o This requirement will be reviewed as part of the Marketing Review Examination Protocol. o This requirement will be reviewed also as part of the OSJ Examination Process. For Internal Use Only 23

24 Exhibit A FINRA Filing Requirements for Various Materials Tax Market Audience for Material FINRA Filing treatment Reasoning (k)/457/ERISA 403(b) plans with more than 100 participants Plan Sponsor/Employer Filing not required Rule 2211 requirements apply (meets definition of Institutional Investor) (k)/457/ERISA 403(b) plans with more than 100 participants Participant Filing not required Material reflects investment in a Retirement Plan Trust (k)/457/ERISA 403(b) plans with less than 100 participants Plan Sponsor/Employer Filing required Rule 2210 requirements apply (k)/457/ERISA 403b plans with less than 100 participants Participant Filing not required Material reflects investment in a Retirement Plan Trust 5. Non-ERISA 403(b) Programs Plan Sponsor and/or Participants Filing required Rule 2210 requirements apply (no related performance may be used) 6. Retail clients (i.e., Personal Retirement Services) 7. Broad communication about registered securities products (e.g., commercial media). Retail customers Filing required Rule 2210 requirements apply (no related performance may be used) All audiences Filing required Rule 2210 requirements apply since the audience is not controlled. For Internal Use Only 24

25 REGISTERED-PRODUCTS RULES AND REGULATIONS FINRA & SEC Advertising Rules For Registered Investment Companies Omitting Prospectus Rule SEC Rule 482 Supplemental Sales Literature SEC Rule 34b-1 Generic Communications SEC Rule 135a Communications with the Public FINRA Conduct Rules 2210 & 2211 Introduction Prudential Retirement plans fall under two broad categories. 1) Participants of 403(b) and nongovernmental 457 plans are offered mutual funds or other registered products, 2) The 401(k), 401(a), governmental 457 plans, and Taft-Hartley market may be offered either mutual funds or unregistered separate accounts. Guidelines In general, FINRA member communications with the public must comply with FINRA Conduct Rule 2210 and Interpretive Materials under Mutual fund and variable contract advertising and sales literature are also subject to specific SEC rules as detailed below. FINRA member communications distributed to institutional customers and all correspondence must comply with Rule 2211, the content standards of Rule 2210(d) (1) and the applicable interpretive materials under In addition to Rules 2210, 2211, and Interpretive Materials, mutual-fund and variable-contract materials must comply with the following SEC rules as applicable: SEC 482 ( Omitting Prospectus Rule ) SEC Rule 34b-1 (Supplemental Sales Literature) SEC 135a (Generic Communication) SEC Rule 482 Omitting Prospectus Rule For Internal Use Only 25

26 Rule 482 permits material used prior to prospectus delivery. The communication must offer the full prospectus. Rule 482 communications carry prospectus liability. In addition, Rule 482 contains: specific standards for the presentation of mutual fund and variable annuity performance data; required disclosures; as well as prominence, proximity, type size and style requirements for certain information. Rule 482 permits investment companies to include up-to-date information, such as current economic conditions, that normally would not be included in a fund's prospectus. As a result, investors should receive better, more understandable, and more timely information in fund advertisements. Not a Safe Harbor: Compliance with Rule 482 does not alter the fact that advertisements must still comply with the antifraud provisions of the federal securities laws. Advertisement of past performance without an adequate explanation of other facts may create unrealistic investor expectations or even mislead potential investors. The portrayals of past income, gain, or growth of assets may be misleading where the portrayals omit explanations, qualifications, limitations, or other statements necessary or appropriate to make these portrayals of past performance not misleading. An advertisement that complies with Rule 482 may nonetheless confuse, or even mislead, investors regarding the fund's current performance, particularly when the fund's performance has declined significantly after the period reflected in an advertisement. Additionally, a mutual fund advertisement may be materially misleading when it showcases a fund's performance for a certain time period without providing sufficient information to permit an investor to evaluate the significance of the performance data. For example, if a fund selectively advertises performance that is unusually high and not representative of the fund's historical performance, investors may be misled. Selectively advertising performance as of a particular date may be problematic where performance has declined after the chosen date, but before the advertisement is submitted for publication. An advertisement that hypes extraordinary performance, but contains only footnote disclosure of unusual circumstances that have contributed to fund performance may not result in a fair and balanced presentation. Rule 482 requires advertisements to include a statement that advises an investor to consider the fund's investment objectives, risks, charges, and expenses carefully before investing; explains that the prospectus contains this and other information about the investment company; identifies a source from which an investor may obtain a prospectus; and states that the prospectus should be read carefully before investing. Example of the prospectus language for a mutual fund: For Internal Use Only 26