In Regulatory Notice 12-55, FINRA addressed a requirement of FINRA Rule 2111 (Suitability), that a broker-dealer or Registered Representative “have a reasonable basis to believe that a recommended transaction, or involving a security or investment strategy involving a security or securities, is suitable for the customer” based upon the customer investment profile. Since the implementation of Rule 2111, questions have arisen regarding the meaning of “customer” and “investment strategy.”
The “investment strategy” language of FINRA Rule 2111 has also been determined to be applicable to:
- Recommendations to customers to invest in specific types of securities or securities within a market sector regardless of whether the recommendations identifying any particular securities;
- Bond ladder type recommendations
- Day trading
- Liquified home equity
- Margin strategy involving securities irrespective of whether the recommendations mention particular securities
- A specific recommendation to hold a security or securities or to continue to use an investment strategy involving a security or securities.
We offer a free initial consultation to investors who feel they may have been victimized by the improper recommendation of an improper investment strategy, or non-security product or improper outside business activity.
The Law Offices of Timothy J. O’Connor is one of the only law firms practicing securities law in the Tri-City Capital District of