FINRA Offers Guidance on FINRA Suitability Rule 2111

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
Albany
, Schenectady and
Troy
.  We also represent victimized investors throughout the rest of New
York State, including Buffalo, Binghamton, Syracuse, Watertown, Utica, Kingston, New York
City/Manhattan, Long Island, and everywhere in between, as well as in the surrounding states of
Massachusetts, Vermont, New Hampshire, Connecticut, and New Jersey.

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