Can a broker-dealer use testimonials in their advertising?

Can a broker-dealer use testimonials in their advertising?

• A. Yes, without any conditions
• B. Yes, as long as more than a nominal fee was disclosed
• C. No, testimonials are strictly prohibited
• D. Only if the testimonials are from current clients

Answer: (B)

A broker-dealer can use testimonials in their advertising as long as they provide the necessary disclosures related to those testimonials. This includes disclosing if the individual providing the testimonial received a fee or any form of compensation in exchange for sharing their experiences. The goal of these regulations is to ensure transparency and prevent potential misrepresentation; thus, it is essential to clarify any conditions under which the testimonial was given, particularly if a fee was involved. This approach aligns with the principles of fair practice and aims to protect investors by ensuring that they have a complete understanding of the information presented to them in promotional materials. The regulation is designed to promote honesty about endorsements and the nature of the testimonials, rather than simply allowing testimonials to be used without oversight or clarity.

A broker-dealer can use testimonials in their advertising as long as they provide the necessary disclosures related to those testimonials. This includes disclosing if the individual providing the testimonial received a fee or any form of compensation in exchange for sharing their experiences. The goal of these regulations is to ensure transparency and prevent potential misrepresentation; thus, it is essential to clarify any conditions under which the testimonial was given, particularly if a fee was involved.

This approach aligns with the principles of fair practice and aims to protect investors by ensuring that they have a complete understanding of the information presented to them in promotional materials. The regulation is designed to promote honesty about endorsements and the nature of the testimonials, rather than simply allowing testimonials to be used without oversight or clarity.