On December 10, 2012, FINRA issued Regulatory Notice 12-55, which provides updated guidance on FINRA’s recently revised Suitability Rule, FINRA Rule 2111. The Notice addresses issues discussed in a previous FINRA notice, Regulatory Notice 12-25, that remained ambiguous, notably, the scope of the terms “customer” and “investment strategy”. The notice further describes the suitability obligations for hold recommendations, non-security investments, and broker-dealers’ supervisory responsibilities. FSI has been urging FINRA to provide additional clarity on these areas since the rule was originally proposed, and applaud FINRA for releasing further guidance.
The following bullet points summarize the new FINRA guidance:
Although we would have preferred FINRA providing clarity on these points at the time the final rule was adopted, we appreciate FINRA’s effort to respond to our concerns by offering this guidance. However, if you have remaining concerns or other feedback you wish to share, please contact FSI’s Advocacy Team or read the full Regulatory Notice.