Burr Alert: FINRA Updates Guidance on its Suitability Rule

December 19, 2012

In its Regulatory Notice 12-55, the Financial Industry Regulatory Authority ("FINRA") has updated its guidance on FINRA Rule 2111 concerning suitability.

This is FINRA's fourth regulatory notice concerning the rule -- it previously published Regulatory Notice 12-25, Regulatory Notice 11-25, and Regulatory Notice 11-02 -- but this notice takes the rule in a slightly different direction, at least appearing to soften enforcement of the rule. This guidance is important to brokers and advisors, particularly because Rule 2111 is reported to have been the "most common ground for disciplinary action this year."1

Rule 2111 requires, in pertinent part, that "[a] member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer's investment profile." The rule goes on to clarify that "[a] customer's investment profile includes, but is not limited to, the customer's age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the member or associated person in connection with such recommendation." It is based on NASD Rule 2310.

To read more about this topic, please see full article below Download PDF


Legal Disclaimer:
No representation is made that the quality of services to be performed is greater than the quality of legal services performed by other lawyers.

Featured Attorneys

send article

TESTIMONIALS

  • "Erich is a great partner and attorney.  His solutions are creative, effective and efficient and he and his team do a great job with execution."

    -Anonymous

  • “My primary contacts at the firm are Doug Anderson and John Kavanagh. Doug assists in real estate matters and John assists in maritime and litigation matters. Both are outstanding attorneys with a wealth of knowledge in their areas. They both have many strengths, but the most valuable quality is their practical, no nonsense and efficient approach to all issues.”

    -Chambers 2012

  • “It is my pleasure to recommend Howard and the healthcare team at Burr & Forman.  From issues related to medical staff bylaws, through numerous regulatory compliance and certificate-of-need applications, to the successful resolution of the largest Medicare recoupment effort against a private medical practice; Howard has always been a knowledgeable counselor, keen advisor and staunch advocate for the hospitals and medical practices I have managed. 

    Howard’s record of accomplishment is broad and impressive.  He is quick to respond when called.  His advocacy style is reassuring as he blends superior organizational skills, subject matter expertise and a willingness to listen and grasp the full understanding of his client’s needs and objectives.  

    This recommendation is made without reservation because for nineteen years, when my own reputation was at stake, I have introduced Howard to the organizations I manage.  In every case, the organization has benefitted greatly as he has managed to achieve the best outcomes possible.”

    -G. Thomas Brown, CEO, Eye Specialty Group and Ridge Lake Ambulatory Surgery Center

  • “We work predominantly with Ed Brown. He has a couple of people alongside him providing support – Kathryn Bouchillon and Harvey Daniels. Both are very good.”

    -Chambers 2012

  • “Good – very efficient, always call(s) me back. A great person who gives you what you need.”

    -Chambers 2012