Tim O'Connor's Blog

Rule 2111 of the Financial Industry Regulatory Authority (FINRA) requires firms to have a supervisory system to focus on the detection, investigation and follow-up of “red flags” indicating that a Registered Representative may have recommended an unsuitable investment strategy with both a security and a non-security component.  For example, a Registered Representative’s recommendation that a […]

The Notice requires firms to have a supervisory system to focus on the detection, investigation and follow-up of “red flags” indicating that a Registered Representative may have recommended an unsuitable investment strategy with both a security and a non-security component.  For example, a Registered Representative’s recommendation that a customer with limited means purchase a large […]

The Financial Industry Regulatory Authority (FINRA) has recently defined complex products to include many of the investment vehicles whose risks were exposed during the financial crisis of 2008-2009.  Examples of complex products include the following:   Asset-backed securities secured by a pool of collateral, such as mortgages, payment from consumer credit cards, or future royalty […]

A customer has been determined to include “a person who is not a broker or dealer who opens a brokerage account at a broker dealer or purchases a security for which the broker-dealer receives or will receive, directly or indirectly, compensation, even though the security is held at an issuer, the issuers affiliate or the […]

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 […]