The Securities and Exchange Commission approved FINRA’s new Suitability Rule (FINRA Rule 2111) in November of 2010. Since then, FINRA issued Regulatory Notice 11-02 announcing this approval and its requirements. Additionally, FINRA Regulatory Notice 11-25 offers further guidance for Rule 2111, which has an implementation date of July 9, 2012.
The new Rule codifies previous interpretations of the former Suitability Rule (NASD Rule 2310), imposing three main suitability obligations in its provisions as follows:
- Reasonable – basis suitability
- Customer – specific suitability
- Quantitative suitability
For particulars of Regulatory Notice 12-25, dated May 16, 2012, entitled “Suitability – Additional Guidance on FINRA’s New Suitability Rule,” click here.