It's finally here. After over a year of discussion and a postponement, Financial Industry Regulatory Authority Rule 2111 on suitability requirements governing the sale of securities is set for implementation July 9. Also scheduled to go into effect on the same date is its companion regulation, FINRA Rule 2090, or Know Your Customer.

The new rules essentially combine, with two significant changes, previous regulations from the National Association of Securities Dealers and the New York Stock Exchange covering suitability standards when securities such as equities, fixed income products, mutual funds, derivatives and variable annuities are being sold by broker-dealers.

In a regulatory notice issued in May 2011, FINRA wrote that a suitability investigation "requires that a firm or associated person 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."

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.