FINRA’s Proposed Suitability Rule – Best Practices for Compliance

• By: Staff Editor
• Date: November 25, 2011

The proposed Suitability Rule 2111 of the Financial Industry Regulatory Authority (FINRA) is modeled after the former NASD Rule 2310 (suitability) and requires that a (brokerage) firm "have a reasonable basis to believe that a recommended transaction or investment strategy involving securities is suitable for a particular customer. This belief should be based on the information about the customer's investment profile obtained through reasonable diligence."

This article describes the best practices to comply with FINRA's Suitability Rule 2111.