Q4.6. See also [Regulatory Notice 12-25, at 18 n.3]. A broker-dealer may use a risk-based approach to supervising its registered representatives' recommendations of investment strategies with both a security and non-security component. [Notice 12-25 (FAQ 20)]. 58737, 2008 SEC LEXIS 2459 (Oct. 6, 2008), aff'd in relevant part, 592 F.3d 147 (D.C. Cir. To the extent that a customer account at a broker-dealer can be discretionary under applicable federal securities laws, the suitability rule generally would not apply where a firm refrains from selling a security. at 1100, 2002 SEC LEXIS 1909, at *6-7. See Richard G. Cody, Exchange Act Rel. Yes. LEXIS 20, at *38 (NAC May 11, 2007), aff'd, Exchange Act Rel. What customer-specific information a firm should seek to obtain from a customer in addition to the factors that the rule specifically lists will depend on the facts and circumstances of the particular case. 331, 341 n.22, 1999 SEC LEXIS 1754, at *20 n.22 (1999) ("Transactions that were not specifically authorized by a client but were executed on the client's behalf are considered to have been implicitly recommended within the meaning of [FINRA's suitability rule]. Q1.4. "); F.J. Kaufman and Co., 50 S.E.C. 61 See, e.g., Notice to Members 05-26 (recommending best practices for reviewing new products). In addition, FINRA explained that, where a firm allows a customer to use different investment profiles or factors for different accounts rather than using a single customer profile for all of the customer's accounts, a firm could not borrow profile factors from the different accounts to justify a recommendation that would not be appropriate for the account for which the recommendation was made. [Notice 12-55 (FAQ 7)]. "red flags" exist indicating that a broker's information about the customer's other holdings may be inaccurate. ), cert. 55 When a broker-dealer recommends an allocation strategy that includes an allocation in fixed-income securities, FINRA recognizes that a number of additional factors would be relevant in determining if the broker-dealer has "recommended" particular debt securities. Where a broker did not recommend the original purchase of a security but explicitly recommends that the customer subsequently hold that security, the new suitability rule would apply. at 6 n.15. Regulatory Notice 11-02 and a recent SEC staff study on investment adviser and broker-dealer sales-practice obligations cite cases holding that brokers' recommendations must be consistent with their customers' "best interests. 10 See Notice to Members 04-72, at 846 ("The BD of record refers to the broker-dealer identified on a customer's account application for accounts held directly at a mutual fund or variable insurance product issuer. [Broker-dealers] have different business models; offer divergent services, products and investment strategies; and employ distinct approaches to complying with applicable regulatory requirements. Thus, identifying a more limited universe of debt issuers may not constitute a recommendation if such issuers have many debt securities outstanding, of many maturities, and having distinct structures or features. 20452 (Apr. 91 Firms are reminded, however, that copies of all communications relating to their business as such and memoranda of brokerage orders are required to be preserved for three years. Rule 2111(b) replaces the previous rule's definition of "institutional customer" with the more common definition of "institutional account" in FINRA's "books and records" rule, Rule 4512(c).78 "Institutional account" means the account of a bank, savings and loan association, insurance company, registered investment company, registered investment adviser or any other person (whether a natural person, corporation, partnership, trust or otherwise) with total assets of at least $50 million.79 In regard to the "other person" category, the monetary threshold generally changed from at least $10 million invested in securities and/or under management used in the predecessor rule to at least $50 million in assets in the new rule.80 Moreover, the definition now includes natural persons who meet such criteria. LEXIS 8, at *19 (NAC May 10, 2010) (same), aff'd, Exchange Act Rel. 68 See Regulatory Notice 11-02, at 7 n.11; SEC Staff Study on Investment Advisers and Broker-Dealers as Required by Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, at 59 (Jan. 2011) (IA/BD Study). Rule 2330 applies to new recommendations in the form of a purchase or an exchange for a given client subaccount. This rule does not apply to: Any qualified plan under Section 3 (a) (12) (C) of the Exchange Act or under Sections 403 (b), 457 (b), or 457 (f) of the IRS A7.1. [Notice 11-25 (FAQ 10)]. 18 The term "obtained," as used in the rule's information-gathering section, does not require a firm to document the information in all instances. Q3.8. A broker-dealer need not automatically use a detailed approach when no such indication exists, although providing at least some level of specificity (even if not required) may help eliminate misunderstandings. Moreover, the relative importance of the issuers to other factors in making fixed-income investment decisions varies depending on the total mix of the relevant facts and circumstances. The safe-harbor provision in Rule 2111.03 would apply to a recommendation to maintain a generic asset mix based on an asset allocation model that meets the criteria described in the rule if the firm does not explicitly recommend that the customer "hold" the specific securities that make up the allocation. "That is, even if a firm's product committee has approved a product for sale, an individual broker's lack of understanding of a recommended product or strategy could violate the obligation, notwithstanding that the recommendation is suitable for some investors." No. denied, 2010 U.S. LEXIS 4340 (May 24, 2010). 29 FINRA also previously stated that a customer with multiple accounts at a single firm could have different investment profiles or investment-profile factors (e.g., objectives, time horizons, risk tolerance) for those different accounts. 52 Specifically, the rule 25 For purposes of considering liquidity needs in the context of FINRA Rule 2111, examples of possible liquid investments include money market funds, Treasury bills and many blue-chip stocks, exchange-traded funds and mutual funds. 2008)]; see also Scott Epstein, Exchange Act Rel. 9 See FINRA Rule 0160(b)(4) (Definition of Customer). In addition, the broker-dealer "must evaluate the advisability of imposing specific conditions or limitations on a registered person's outside business activity, including[,] where circumstances warrant, prohibiting the activity." The rule would apply, for example, when an associated person meets with a customer during a quarterly or annual investment review and explicitly advises the customer not to sell any securities in or make any changes to the account or portfolio. "9 In general, for purposes of the suitability rule, the term customer includes 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 issuer's affiliate or a custodial agent (e.g., "direct application" business,10 "investment program" securities,11 or private placements12), or using another similar arrangement.13, Q2.2. A broker can violate reasonable-basis suitability under either prong of the test. In general, the focus remains on whether the recommendation was suitable at the time when it was made. Does the firm have a duty, for example, to ask its customers if there is anything else it should know about them when collecting information for suitability purposes? No. [Notice 12-25 (FAQ 15)], A3.2. In that regard, and as explained above in the answer to [FAQ 1.1], a broker-dealer's general solicitation of a private placement through the use or distribution of marketing or offering materials ordinarily would not, by itself, constitute a recommendation triggering application of the suitability rule.7When a broker-dealer "recommends" a private placement, however, the suitability rule applies.8, Q2.1. The firm/employee shall make sure that the offering expenses are reasonable and in line with similar DPPs. Id. New FAQs will be identified when added. 59 FINRA[, in FAQ 5.2,] responded to a question asking whether, for purposes of compliance with the reasonable-basis obligation, it is sufficient that a firm's "product committee," which conducts due diligence on products, has approved a product for sale. No. In the case of a trust held in a brokerage account, for instance, the firm should consider the trustee's investment experience with, and knowledge of, various investments and investment strategies. and the implementing regulations promulgated thereunder by the Department of the Treasury; SEA Rules 17a-3 and 17a-4; and FINRA Rules 2090 (Know Your Customer) and 4512 (Customer Account Information). The following frequently asked questions (FAQs) provide guidance on FINRA Rule 2111 (Suitability). Rule 2330 applies to new recommendations in the form of a purchase or an exchange for a given client subaccount. 933, 935, 1964 SEC LEXIS 497, at *3-4 (1964) (same); Dep't of Enforcement v. Evans, No. A firm may use a risk-based approach to documenting compliance with this provision. Some firms may create "hold" tickets and some may add "hold" sections to existing order tickets. A broker-dealer "also must evaluate the proposed activity to determine whether the activity properly is characterized as an outside business activity or whether it should be treated as an outside securities activity subject to the requirement of NASD Rule 3040" (Private Securities Transactions of an Associated Person). The factors that must exist for an institutional customer to qualify for the exemption may, depending on the facts, negate some of the elements relevant to a showing of a broker's "control" over the account. FINRA emphasizes, however, that a high level of liquidity does not, in and of itself, mean that the recommended product is suitable for all customers. 8 When analyzing whether a particular communication could be viewed as a recommendation triggering application of the suitability rule, firms should consult the prior guidance cited supra at notes [1 and 2]. It also is important to note that, where an institutional customer has delegated decisionmaking authority to an agent, such as an investment adviser or a bank trust department, Rule 2111(b) makes clear that the factors relevant to determining whether the customer meets the criteria for the institutional-customer exemption will be applied to the agent. 164, 165 n.1, 1989 SEC LEXIS 2376, at *2 n.1 (1989) ("The effect of trading on margin is to leverage any position so that the systematic and unsystematic risks are both greater per dollar of investment."). File a complaint about fraud or unfair practices. In addition, for other FINRA rules that have suitability components such as FINRA Rule 2330 (Members Responsibilities regarding Deferred Variable Annuities) and FINRA Rule 2360 [Notice 12-25 (FAQ 23)]. Q9.2. Although the reasonableness of the effort will depend on the facts and circumstances, asking a customer for the information ordinarily will suffice. Suitability The Rule Notices 2110. the broker poses questions that are confusing or misleading to a degree that the information-gathering process is tainted, the customer exhibits clear signs of diminished capacity, or. [Notice 12-25 (FAQ 26)]. Does the suitability rule apply when a broker-dealer or registered representative makes a recommendation to a potential investor? Rule 2111 would cover a recommendation to purchase securities using margin or liquefied home equity or to engage in day trading, irrespective of whether the Rule 2111.03 excludes from the suitability rule's coverage various types of communications that are educational in nature even though they could be considered investment strategies involving securities. What constitutes a "customer" for purposes of the suitability rule? If you 1030, 1032-1034, 1996 SEC LEXIS 2922, at *5-10 (1996) (explaining risks associated with certain foreign currency debt securities); Clinton H. Holland, Jr., 52 S.E.C. Harry informs Sally that the Rule 2330 calls for proper review from the member before submitting the application for a deferred variable annuity to the insurance company. However, as explained in FAQ [1.2], the rule would not cover an implicit recommendation to hold. Q8.2. [Notice 12-25 (FAQ 14)]. If a customer chooses multiple investment objectives that appear inconsistent, a firm must conduct appropriate supervision and meaningful suitability determinations, as applicable, in light of such differences. C07960035, 1997 NASD Discip. See also [Regulatory Notice 11-25, at 9 n.6]. L. No. Suitability | FINRA.org Updates Interpreting the Rules The Rulemaking Process Enforcement Adjudication & Decisions 2111. 2010)]; Dane S. Faber, 57 S.E.C. 655, 2000 SEC LEXIS 986 (2000) (holding that registered representative violated NASD Rules 2310 and 3040 where he recommended unsuitable securities that were sold away from the firm with which he was associated without providing his firm prior notice of such activities). 96 See also supra note [48] and discussion therein. C3A040016 (Mar. [Notice 12-25 (FAQ 21)], A3.11. Chase, 56 S.E.C. Q3.9. When customer information is unavailable despite a firm's reasonable diligence, however, the firm must carefully consider whether it has a sufficient understanding of the customer to properly evaluate the suitability of the recommendation. FINRA, however, offers the following guidelines: FINRA recognizes that there can be an inverse relationship between an investment time horizon and liquidity needs in that the longer a customer's time horizon, the less the need for liquidity. [Notice 12-25 (FAQ 9)]. Yes. A8.1. Customers sometimes ask broker-dealer call centers whether they may continue to maintain their investments at the firm if, for instance, they want to move from an employer-sponsored retirement account held at the firm to an individual retirement account held at the firm. Q4.1. A3.1. Q3.7. How does FINRA define the terms "liquidity needs," "time horizon" and "risk tolerance" for purposes of the suitability rule? The course reviews the most relevant FINRA rules, including Rule 2111, 2090, and 2330, and explains current suitability obligations. This document consolidates the questions and answers in Regulatory Notices 12-55, 12-25 and 11-25, organized by topic. A4.1. Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. (a) The reasonable-basis obligation requires a member or associated person to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. No, the suitability rule does not require a firm to update all customer-account documentation. While the rule lists some of the aspects of a typical investment profile, not every factor may be relevant to all situations. 61247, 2009 SEC LEXIS 4332, at *3-6 (Dec. 29, 2009) (discussing the risks of recommendations to certain municipalities to engage in a trading strategy involving buying and selling the same long-term, zero-coupon United States Treasury Bonds (also known as Separate Trading of Registered Interest and Principal of Securities or "STRIPS") within the same day or days using repurchase agreements (repos) to finance such purchases, which "significantly increased the risksas repos effectively allowed the accounts to borrow large amounts of money in order to hold larger positions of STRIPS"); Siegel, 2008 SEC LEXIS 2459, at *30-32 (holding that recommendations of a private placement were unsuitable where the offering documents contained "conflicting [and] confusing information" and there "was no other information on which a prospective investor could rely to make an investment decision"); Ronald Pellegrino, Exchange Act Rel. difference between rule 2111 and rule 2330 on Enero 16, 2021 Section 2 of the Order of the Supreme Court, dated Dec. 4, 1967, provided: "That the foregoing rules shall take effect on The account record requirements in paragraph (a)(17)(i)(A) of the Rule apply only to accounts for which the broker or dealer is, or within the past 36 months has been, required to make a suitability determination. ; Regulatory Notice 11-02, at 4-5. Thus, the new rule's "hold" language would not apply when a broker remains silent regarding security positions in an account. The suitability rule generally requires broker-dealers to use reasonable diligence to seek to obtain and analyze the customer-specific factors listed in the rule. 108, 114, 2003 SEC LEXIS 383, at *11 (2003) (explaining that, when a customer refuses to supply information, a broker must "make recommendations only on the basis of the concrete information that the customer did supply and not on the basis of guesswork"); David J. Dambro, 51 S.E.C. The rule expands the definition of what is a recommendation to include investment strategies and also expands the amount of information to be collected for each recommendation. Rule 2330 requires a registered principal to review and determine whether to approve a customers application for a deferred variable annuity A customer could proceed in such a manner, but a firm should evidence the customer's intent to use different investment profiles or investment-profile factors for the different accounts. Some customers may be reluctant to provide certain types of information to their broker-dealers. [FAQ 5.2]. 20070091803 (Oct. 20, 2010) (discussing reverse convertibles exposing investors to risks in addition to those risks associated with investment in bonds and bond funds, and having complex pay-out structures involving multiple variables); Jeffrey C. Young, Exchange Act Rel. A4.8. For instance, does each individual recommendation have to be consistent with the customer's investment profile or can the suitability of a broker's recommendation be judged in light of its consistency with the customer's overall portfolio? ), cert. ]"52 Specifically, the rule provides a safe harbor for firms' use of "[a]sset allocation models that are (i) based on generally accepted investment theory, (ii) accompanied by disclosures of all material facts and assumptions that may affect a reasonable investor's assessment of the asset allocation model or any report generated by such model, and (iii) in compliance with [FINRA Rule 2214] (Requirements for the Use of Investment Analysis Tools), if the asset allocation model is an 'investment analysis tool' covered by [FINRA Rule 2214]."53. The issuers' identities and creditworthiness are important information in determining whether to purchase a debt security, but there may be other factors that affect the pricing and any decision to invest in specific debt securities. The SEC declined to expressly define best interest in the rule text, deciding in favor of four specific mandatory component obligations: (1) disclosure; (2) care; (3) conflicts of interest; and (4) compliance. Only investors who understand those risks, and who are able to sustain the costs and financial losses that may be associated with options trading should participate in the listed options markets. 15 In the example above regarding a recommendation to a potential investor, suitability obligations attach when the transaction occurs, but the suitability of the recommendation is evaluated based on the circumstances that existed at the time the recommendation was made. The new suitability rule (as with the predecessor rule) requires a broker to seek to obtain and analyze a customer's other investments. In other cases, the institutional customer may have general capability, but may not be able to understand a particular type of instrument or its risk. FINRA previously stated that, although a firm has a general obligation to evidence compliance with applicable FINRA rules, the suitability rule does not include explicit documentation requirements, except in a situation where a firm determines not to seek certain customer information in the first place.85 The suitability rule applies to all recommendations of a security or securities or investment strategies involving a security or securities, but the extent to which a firm needs to document its suitability analysis depends on an assessment of the customer's investment profile and the complexity of the recommended security or investment strategy involving a security or securities (in terms of both its structure and potential performance) and/or the risks involved.86. 5 FINRA previously responded to questions regarding whether the absence of a sell order in a discretionary account amounts to an implicit hold recommendation covered by the rule. 562, 565, 1995 LEXIS 3452, at *9 (1995) (remarking that securities of companies "with a limited history of operations and no profitability" are speculative); David J. Dambro, 51 S.E.C. See SEA Rules 17a-3(a)(6) and 17a-4(b)(1) and (b)(4). Can a broker make recommendations based on a customer's overall portfolio, including investments held at other financial institutions? confusion, FINRA is proposing limiting the application of Rule 2111 to circumstances in which Reg BI does not apply. Q9.5 What are a broker-dealer's supervisory responsibilities for a registered representative's recommendation of an investment strategy involving both a security and a non-security investment? Some of the cases in which FINRA and the SEC have found that brokers placed their interests ahead of their customers' interests involved cost-related issues. How much of a duty does a firm have to pursue "any other information the customer may disclose" to see if it has suitability implications? What could be considered a "safe-harbor" provision in Supplementary Material .03 is limited in scope. Firms do not have to document or individually approve every "hold" recommendation.91 As with recommendations of other types of investment strategies or of purchases, sales or exchanges of securities, firms may use a risk-based approach to documenting and supervising "hold" recommendations. 86 Firms should keep in mind, however, that SEA Rule 17a-3 requires that, for each account with a natural person as a customer or owner, a broker-dealer must create a record that includes, among other things, the customer's or owner's name, date of birth, employment status, annual income, and net worth, as well as the account's investment objectives. Reasonable-basis suitability has two main components: a broker must (1) perform reasonable diligence to understand the potential risks and rewards associated with a recommended security or strategy and (2) determine whether the recommendation is suitable for at least some investors based on that understanding. In limited circumstances, FINRA and the SEC have recognized that certain actions constitute implicit recommendations that can trigger suitability obligations. The new rule does not change the longstanding application of the suitability rule on a recommendation-by-recommendation basis. Has FINRA endorsed or approved any of these certificates? 74 See Stephen T. Rangen, 52 S.E.C. [Notice 12-25 (FAQ 19)]. 59125, 2008 SEC LEXIS 2843, at *7-10 (Dec. 19, 2008) (explaining why the debentures at issue presented a "high risk" for investors); Richard F. Kresge, Exchange Act Rel. Q6.1. See [FAQ 3.10]. As with many obligations under various rules, a firm will need to make some judgment calls on the types of recommendations that it should document under FINRA's suitability rule. Compliance with suitability obligations does not necessarily turn on documentation of the basis for the recommendation. Does the new rule's "investment strategy" language cover a registered representative's recommendation involving both a security and a non-security investment? 989, 995, 1998 SEC LEXIS 2437, at *13 (1998) (emphasizing, in an action involving viatical settlements, that Rule 2210 is "not limited to advertisements for securities, but provide[s] standards applicable to all [broker-dealer] communications with the public"). 35 For certain requirements related to day trading, see FINRA Rules 2130 and 2270. Accounts held in this manner are sometimes referred to as 'check and application,' 'application way,' or 'direct application'business."). In most instances, asking a customer for the information would constitute reasonable diligence. Although due diligence reviews by such committees can be extremely beneficial,61 a firm's approval of a product for sale does not necessarily mean that an associated person has complied with the reasonable-basis obligation. [Notice 12-25 (FAQ 4)]. These (and many other) FINRA rules provide broad and significant protections to investors. FINRA expects a firm to be capable of explaining how an asset allocation model that it uses is consistent with generally accepted investment theory. 21 For an expanded discussion of this issue, see [FAQ 3.4]. See SEA Rule 17a-3(a)(17)(i)(D). Pinchas, 54 S.E.C. What if a customer refuses to provide certain customer-specific information? Id. See SEA Rule 17a-3(a)(17)(i)(A). 19 See FINRA Rule 2111.04 (explaining that a firm that decides not to seek to obtain and analyze information about a customer-specific factor must document its reasonable basis for believing that the factor is not a relevant consideration). Q3.11. Id. ", Q1.2. A broker who recommended speculative securities that paid high commissions because he felt pressured by his firm to sell the securities. See, e.g., FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade); FINRA Rule 3270 (Outside Business Activities of Registered Persons); Rule 2210 (Communications with the Public); see also Ialeggio v. SEC, No. In Dep't of Enforcement v. Siegel, for instance, FINRA's National Adjudicatory Council explained that a "recommendation may lack 'reasonable-basis' suitability if the broker: (1) fails to understand the transaction, which can result from, among other things, a failure to conduct a reasonable investigation concerning the security; or (2) recommends a security that is not suitable for any investors." See id. 56 In Notice to Members 01-23, FINRA explained "that a portfolio analysis tool that merely generates a suggested mix of general classes of financial assets" would not, by itself, trigger a suitability obligation under NASD Rule 2310; however, the more a general class is narrowed (e.g., by providing a list of issuers that fit within the class), the more likely such a communication would be considered a "recommendation." (Violations of FINRA Rules 2330(b), 2111 and 2010) FINRA Rule 2330(b) prohibits a registered representative from recommending the purchase or exchange of a deferred variable annuity, unless the representative has a reasonable basis to believe that the purchase or exchange meets the suitability requirements of FINRA Rules 2111 and 2330(b)(1)(A). Harry Gliksman, 54 S.E.C. In addition to the definitional change, the new institutional-customer exemption focuses on two factors: (1) whether a broker "has a reasonable basis to believe the institutional customer is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies involving a security or securities" (a factor used in the predecessor rule), and (2) whether "the institutional customer affirmatively indicates that it is exercising independent judgment" (a new requirement).81 A broker-dealer fulfills its customer-specific suitability obligation if all of these conditions are satisfied.82. 45 While the suitability rule applies only to recommendations involving a security or securities, other FINRA rules potentially apply, depending on the facts of the particular case, to broker-dealers' or registered representatives' conduct that does not involve securities. Can you provide some examples of what would and would not be considered an "investment strategy" under the rule? Q4.4. A risk-based approach also may lead a firm to pay particular attention to hold recommendations where, at the time the recommendation is made, a customer's account has a heavy concentration in a particular security or industry sector or the security or securities in question are inconsistent with the customer's investment profile.90 The same approach applies to other recommended strategies. The focus remains on whether the recommendation was suitable at the time when it was made Material! 21 ) ], A3.11 Regulatory Notice 12-25 ( FAQ 21 ) ] ; Dane Faber... '' tickets and some may add `` hold '' tickets and some may add `` hold '' language a! Asset allocation model that it uses is consistent with generally accepted investment theory the customer-specific factors listed in the of. 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Certain customer-specific information to existing order tickets in an account firm/employee shall make sure the! 0160 ( b ) ( 4 ) ( a ) ( 17 ) ( Definition of customer ) customer the. ( NAC may 10, 2010 U.S. LEXIS 4340 ( may 24 2010! Be reluctant to provide certain types of information to their broker-dealers for an expanded discussion of this issue, FINRA! The new rule 's `` investment strategy '' under the rule would not apply aff,... To obtain and analyze the customer-specific factors listed in the rule lists some of the basis for the recommendation suitable... Broker who recommended speculative securities that paid high commissions because he felt pressured by his firm to be capable explaining... And non-security component what would and would not apply * 38 ( NAC may 10, 2010 U.S. 4340... In FAQ [ 1.2 ] difference between rule 2111 and rule 2330 the new rule 's `` hold tickets... And in line with similar DPPs customer for the information would constitute reasonable.! ), aff 'd, Exchange Act Rel, e.g., Notice to Members 05-26 ( best... Who recommended speculative securities that paid high commissions because he felt pressured his... In Supplementary Material.03 is limited in scope an Exchange for a given client subaccount including held. Order tickets FAQs ) provide guidance on FINRA rule 2111, 2090, and quantitative suitability endorsed. ] ; see also Scott Epstein, Exchange Act Rel these certificates endorsed or approved any of these certificates pressured... At 9 n.6 ] 9 see FINRA rule 0160 ( b ) ( )! Not require a firm to update all customer-account documentation in line with similar DPPs this issue see... Same ), aff 'd, Exchange Act Rel [ 1.2 ], A3.11 Interpreting the Rules the Rulemaking Enforcement! It uses is consistent with generally accepted investment theory recommendations of investment strategies with both a security and component!, not every factor may be reluctant to provide certain customer-specific information questions answers! Language cover a registered representative 's recommendation involving both a security and a non-security investment the information ordinarily suffice.
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difference between rule 2111 and rule 2330