06.25.2018 | Articles / Publications
Law360: Removing ‘Control’ From FINRA Quantitative Unsuitability
In an article published in Law360 on June 20, 2018, partner Tom Potter addresses “know-your-customer” rules for stock traders when recommending a sale or exchange of any security to a customer. “For many years, courts and regulators alike acknowledged that excessive trading in an account in disregard of a customer’s circumstances and objectives could violate the suitability rules,” says Potter. He goes on to explain the new rule changes the focus from the customer to the customer’s investor profile detailing, “Thus, FINRA’s proposed deletion of ‘control’ as an element of quantitative suitability ‘front-runs’ the promulgation of the SEC’s best-interest standard. It also returns the suitability rules to their roots.”
Subscribers may access the full article here.