[Notice 12-25 (FAQ 14)]. Where a broker did not recommend the original purchase of a security but explicitly recommends that the customer subsequently hold that security, the new suitability rule would apply. Proposed Rule Change to FINRA’s Suitability, Non-Cash Compensation and Capital Acquisition Broker (CAB) Rules in Response to Regulation Best Interest, FINRA operates the largest securities dispute resolution forum in the United States, Report a concern about FINRA at 888-700-0028. Due to their complexity, they are a large source of consumer complaints to the SEC/FINRA.
Q8.2. Accounts held in this manner are sometimes referred to as 'check and application,' 'application way,' or 'direct application'...business."). (d) Interactive investment materials that incorporate the above. See 77 Fed. 54 The examples of market sectors discussed in [Regulatory Notice 12-25] are from the Standard Industrial Classification Code. For example, the recommendation of a large-cap, value-oriented equity security generally would not require written documentation as to the recommendation. As noted above in the answer to [FAQ 3.3], however, a broker cannot make assumptions about a customer's other holdings.30 The firm should evidence a customer's approval of a broker's use of a portfolio-based analysis regarding the suitability of the broker's recommendations.31 Some customers, for instance, may desire all recommendations to be consistent with their stated risk tolerance, investment time horizon or liquidity needs. [FAQ 5.2]. 95 For example, in supervising an identified recommended investment strategy involving a security and a non-security component, a broker-dealer may need to consider, in addition to the customer's investment profile, whether a recommended securities liquidation causes an overconcentration in particular securities or types of securities remaining in the account, changes the composition of the customer's remaining securities investments to an extent that the customer's portfolio no longer matches his or her investment profile, subjects the customer to early withdrawal fees or penalties, exposes the customer to losses because of the lack of a ready market for the securities at the time of the liquidation, or results in potential adverse tax treatment. . (a) The reasonable-basis obligation requires a member or associated person to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least. The review should indicate whether the principal has approved the purchase on behalf of the customer or rejected it. See also [infra note 86; Regulatory Notice 12-25, at 19 n.12]. This exercise would require the associated person to conduct a review of such reasonably available alternatives that is reasonable under the circumstances.”, Now this is something totally new. h��X�n�8�>�(\�~� ��$.�nP{�~Pc5`[��`��)ٲ|�� �5"��yx8C+%VN�g�XM���!J 149, 153 & 156-157, 2003 SEC LEXIS 566, at *7-8 & *13 (2003) (discussing speculative nature of the security of "a start-up company whose business consisted of manufacturing and selling a single product" that was "new and had no established or tested market" and emphasizing the risks associated with overly concentrated securities positions); Larry I. Klein, 52 S.E.C. 86 Firms should keep in mind, however, that SEA Rule 17a-3 requires that, for each account with a natural person as a customer or owner, a broker-dealer must create a record that includes, among other things, the customer's or owner's name, date of birth, employment status, annual income, and net worth, as well as the account's investment objectives. See Cody, 2011 SEC LEXIS 1862, at *48 (finding turnover rate of three provided support for excessive trading); Dep't of Enforcement v. Stein, No. All other trademarks and copyrights are the property of their respective owners. Are there any particular kinds of postings on social media by a …

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