NFA Interpretive Notice Re: Review of Promotional Material (NFA Rule 2-29)
This article provides an overview of an interpretive notice to NFA Compliance Rule 2-29 which applies to current NFA Members (generally commodity pool operators and commodity trading advisors). In this interpretive notice the NFA outlines its review program for promotional materials submitted by NFA members prior to the first use of the promotional materials. Generally the NFA will review the promotional materials and get back to the member within 21 calendar days. NFA members should note that review by the NFA does not provide a “safe harbor” for the promotional materials and should not be used as a substitute for a compliance review within the member firm.
With regard to current NFA members who engage in trading or advising on off-exchange forex transactions, this may apply if rules recently proposed by the NFA are approval by the CFTC and if the NFA Member utilizes promotional material which references hypothetical forex performance results. (See NFA Proposes Additions to Forex Compliance Rules.) With regard to the anticipated registration of forex-only managers and funds, this interpretive notice may apply in the future.
If you have any questions on this interpretive notice or if it applies to your firm, please contact us to discuss your situation. Other related forex law articles include:
- NFA Compliance Rule 2-29
- Discussion of NFA Compliance Rule 2-29 (from Hedge Fund Law Blog)
- Forex Registration Requirements (please also see our other website on Forex Registration)
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NFA COMPLIANCE RULE 2-29: REVIEW OF PROMOTIONAL MATERIAL PRIOR TO ITS FIRST USE
INTERPRETIVE NOTICE
As a service to its Members and the investing public, NFA offers a program for the review of promotional material prior to its first use. This program is voluntary and no Member must file promotional material with NFA unless otherwise required to do so by rule or directive. In addition, this program in no way lessens the requirement that Members supervise the preparation of and review all promotional material. Members may not attempt to use NFA staff’s review as a substitute for its own.
Members wishing to avail themselves of the pre-review program may submit promotional material to the Compliance Department at least 21 calendar days prior to its first intended use. This material should be directed to:
National Futures Association
Compliance Department
Advertising Regulation Team
Suite 1800
300 S. Riverside Plaza
Chicago, IL 60606
In addition, Members may ask general questions about promotional material or Compliance Rule 2-29 by contacting NFA’s Information Center at (312) 781-1410 or (800) 621-370 or through the “contact” feature of NFA’s web site at www.nfa.futures.org. Such inquiries will be forwarded to the appropriate personnel for response.
Submitted material must be accompanied by a cover letter signed by a supervisory employee responsible for the review of the Member’s promotional material. NFA staff will not pre-review material received directly from APs.
NFA staff will review submissions as expeditiously as possible. If additional information is needed, or the review cannot be completed within the 21 day period, the Member will be so notified. (In our experience, most reviews take far less than 21 days, and reviews take more than 21 days only in highly unusual circumstances.) At the conclusion of the review the comments of NFA staff will be conveyed to the Member, generally by telephone. Obviously NFA staff will not be able to independently verify the accuracy of every statement or numerical claim made in a piece of promotional material within the 21 day review period; that responsibility remains with the Member. Therefore, submitting promotional material to NFA will not provide a “safe harbor” for Members if misstatements or omissions of material facts are discovered subsequently. However, NFA staff review will provide valuable guidance to Members, particularly with regard to such areas as balance and the proper use of disclaimers.
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[...] Filing of promotional material with the NFA - In this interpretive notice the NFA outlines its review program for promotional materials submitted by NFA members prior to the first use of the promotional materials. Generally the NFA will review the promotional materials and get back to the member within 21 calendar days. [...]