The following frequently asked questions (FAQs) provide guidance on FINRA Rule 2111 (Suitability). This document consolidates the questions and answers in Regulatory Notices 12-55, 12-25 and 11-25, organized by topic.
I M P O R T A N T
OFFICERS, PARTNERS AND PROPRIETORS
TO: All NASD Members and Other Interested Persons
SUMMARY
In response to a request by the Association, the staff of the SEC's Division of Market Regulation has recently issued its views on frequently raised interpretive questions regarding Rules 15c2-4 (the "Rule") under the Securities Exchange Act of 1934 (the "Act
Registered representatives who are not qualified to engage in investment banking activities may, subject to specified conditions, receive transaction-based compensation for referring existing brokerage clients that express an interest in investment banking transactions.
Dear Mr. Markunas:
This is in response to your correspondence dated June 15, 2020, in which you request interpretive guidance
Additional Guidance on FINRA’s New Suitability Rule
I am writing to protest the planned FINRA regulatory notice #22-08 that would restrict my right to invest in leveraged and/or inverse ETF products. These types of investment products are not for everyone but they do serve an important role in hedging and investment strategies for experienced investors who understand and can managed the inherent risks. Furthermore, banning these investment
The Variable Annuities topic of the 2024 FINRA Annual Regulatory Oversight Report (the Report) informs member firms’ compliance programs by providing annual insights from FINRA’s ongoing regulatory operations, including (1) regulatory obligations and related considerations, (2) findings and effective practices, and (3) additional resources.
I am a private investor who has used leveraged and inverse funds for over 8 years to augment a portion of my investment portfolio. There are higher risks investing in these funds that I am fully aware of and capable of managing. Individual investors should have the right to invest in whatever instrument their risk tolerance is matched to, with strategies that they develop to minimize those risks
Comments: A custodian of private individual accounts should provide a disclaimer when L&I funds are purchased. It should detail the risks and advise that it is not a long-term holding. No one should be restricted from purchasing these products. An informed individual should scale his or her risk tolerance before purchase.
Dear FINRA, 5-6-22
I am a private investor who has been investing in the markets for the last 40 years, and have been successful using inverse funds, to include SH, PSQ, DOG to hedge against volatility, and frequent downturns in the markets. I do not think any regulator will be able to know more than I do about my own families personal financial situation. Passing a test first, seems
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Convertible
Used to indicate if the bond is convertible. A convertible bond is a corporate debt security that can be converted into equity at specific times during the bond's lifcycle usually at the discretion of the bondholder.
So that investors understand the nature of the bond.
