Firms Will Breathe a Sigh of Relief on FINRA's Suitability Rules
FINRA, recently, issued Regulatory Notice 12-55, regarding suitability.
In that notice, FINRA said that the Rule applies to customers, who open an account to buy a product where the broker dealer receives compensation. The regulatory notice also said that FINRA’s suitability rule does not apply to recommendations of non-security products that may be part of an individual broker’s outside business activity. See FINRA Regulatory Notice 12-55, and http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p197435.pdf
Nonetheless, firms must ensure that they have the suitability analyses that assist them in understanding the investor and the investor’s investment strategy for these non-security issues.
As such, firms should feel some ease at this clarification of FINRA’s suitability rule, allowing them to move forward expeditiously. However, it should not be taken as a “get out of jail free card.” FINRA will still ensure that BDs make suitability assessments for their customers or know your customers when necessary.