General Securities Sales Supervisor (Series10) Practice Exam

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How many customers may a firm send a promotional piece to without prior principal approval when all customers are institutional investors?

Not more than 25
Not more than 40
All institutional investors
None

The correct answer is: All institutional investors

When dealing with institutional investors, regulations allow firms to send promotional material without prior principal approval for as many customers as they wish. This is based on the understanding that institutional investors typically have the knowledge and resources necessary to evaluate promotional content effectively. Consequently, firms are not restricted in the number of institutional clients they can reach out to with promotional material, provided that the content is not misleading or inappropriate. This distinction underscores the different regulatory requirements related to communications with retail versus institutional clients, highlighting the autonomy given to firms in their interactions with institutional entities.