Listed below are highlights of certain Conduct Rules that apply to all forms of electronic communication. Suitability - RRs must have reasonable grounds for believing that each recommendation to a customer is suitable on the basis of the information provided by the customer. Conflicts of Interest - RRs must avoid any conflicts of interest in transactions with customers. For instance, the NASD would likely question the motivation of an RR who personally buys shares of a thinly traded stock and then publicly makes a buy recommendation, or promotes the stock in a chat room. Use of Current Information - Representatives who communicate electronically must understand the importance of using current information.
Outdated information runs a high risk of being inaccurate and misleading investors.
Each state has separate registration requirements for individuals doing business in that state. Generally, the solicitation of business in a state triggers the requirement for registration. RRs are advised to rely on their individual firms for guidance regarding state registration issues. All communications with the public are subject to compliance with the NASD Conduct Rules. The NASD would likely question the motivation of an RR who personally buys shares of a thinly traded stock and then publicly makes a buy recommendation, or promotes the stock in a chat room.