Important Marketing Laws for Financial Firms in a Nutshell

By Amanda Marie on 6/18/17 10:15 AM


There are several marketing related laws that financial services firms must obey. Some of the laws are specific to the industry, but others are broader and apply to all advertising and marketing. The regulations can seem daunting at first, but once you dive in there and clear away some of the jargon, they are somewhat easy to understand and follow.

It’s important to note here that Reputation X is not providing legal advice, nor are we lawyers (although we do work with them). The list and descriptions of laws and regulations within is not a comprehensive list. To ensure that you are using the proper channels and meeting the standards, check with the Small Business Association, perform adequate research, and seek legal advice if necessary.

General Advertising Laws

When engaging in advertising, all organizations and individuals are obligated to comply with certain rules as set in place by regulatory bodies. These rules are not industry specific, so following them is mandatory for any kind of advertising. These laws are in place to protect consumers, and it can’t be stated enough that all businesses engaged in advertising are subject to them.

The laws described herein are regulated by the Federal Trade Commision, whose mission it is to prevent business practices that are deceptive or unfair. Their mission statement also includes a clause about regulation without interference or undue burden on legitimate business activity. When reviewing an advertisement, the Federal Trade Commision assumes the viewpoint of the reasonable consumer, or someone who is considered typical who is also viewing the advertisement. The commission reviews the ad within its full context, such as the words and pictures, when determining what the ad portrays and transmits.


The Federal Trade Commission Act states that advertising must be truthful and non-deceptive. The commission regards it as their duty to protect consumers from fraudulence that would occur given a situation where an advertisement is deceptive.

Advertisers must also be able to present evidence that supports claims made in their advertisements and marketing materials. When possible, the commission looks for claims that are backed by scientific research and data. If none can be found, the advertisement in question can be considered fraudulent.


Lastly, and perhaps oddly, advertisements must be fair. The fairness of an advertisement is gauged by a few criteria determined by the FTC. If the advertisement causes, or is likely to cause, substantial consumer injury which is unavoidable, the advertisement can be considered unfair. If the unfairness of an advertisement outweighs the benefit to a consumer, as well, this is another potential legal problem.

What is FINRA?

The Financial Industry Regulatory Authority (FINRA) serves a role that you’ve probably guessed by the name. They are a not-for-profit, non-governmental self-regulatory organization. That’s a lot to chew at once, so it’s enough to understand that they effectively regulate brokerages and exchange markets without government approval or assistance.

One of the primary statutes specific to the financial services sector is the FINRA Rule 2210. The rule is designed to help regulate communications from broker dealers to the public, like advertising. The rule is a rubric of fairness, balance, and truthfulness involving advertising and communication between financial services firms and the public.

The FINRA organization reviews advertisements from broker dealers and measures them for compliance with the FINRA Rule 2210 and all of the clauses therein. The FINRA organization also checks for advertising compliance with other regulatory bodies such as the Stock Exchange Commision (SEC), the Municipal Securities Rulemaking Board (MSRB), and the Securities Investor Protection Corporation (SIPC).

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