On May 15, the Financial Industry Regulatory Authority issued Regulatory Notice 09-25 requesting comment on proposed rules governing suitability and know-your-customer obligations. Proposed FINRA Rule 2111 (modeled on National Association of Securities Dealers Rule 2310, which would be eliminated) would codify various interpretations regarding the scope of the suitability rule (such as explicitly applying suitability obligations to a recommended transaction or investment strategy involving a security or securities), clarify the information to be gathered and used as part of a suitability analysis and create a clear exemption for transactions or investment strategies involving a security or securities recommended to institutional customers, subject to specified conditions. FINRA proposes to adopt as FINRA Rule 2090 a modified version of New York Stock Exchange Rule 405(1) regarding know-your-customer obligations, under which firms would be required to use due diligence, in regard to the opening and maintenance of every account, to know the essential facts concerning every customer (including the customer’s financial profile and investment objectives or policy). Comments must be received by FINRA by June 29.
To read FINRA Regulatory Notice 09-25,click here
