The answer depends on the facts and circumstances of the particular case. [Notice 11-25 (FAQ 7)]. 1 See, e.g., Regulatory Notice 11-02, at 2-3 (discussing FINRA's guiding principles that firms and brokers should consider when determining whether a particular communication could be considered a "recommendation" for purposes of the suitability rule); Regulatory Notice 10-06, at 3-4 (providing guidance on recommendations made on blogs and social networking websites); Notice to Members 01-23 (announcing the guiding principles and providing examples of communications that likely do and do not constitute recommendations); Michael F. Siegel, Exchange Act Rel. C3A960029, 1999 NASD Discip. In general, FINRA would not view those communications as "hold" recommendations for purposes of the rule because the firm's call center is not responding to the question of whether the customer should hold the securities, but rather whether the customer can continue to maintain them at the firm. See 77 Fed. The new suitability rule (as with the predecessor rule) requires a broker to seek to obtain and analyze a customer's other investments. LEXIS 22 (Mar. 85 See [Regulatory Notice 12-25, at 18 n.3]. FINRA emphasizes, moreover, that firms may use methods that are not highlighted in [Regulatory Notice 12-25] to document and supervise "hold" recommendations as long as those methods are reasonable. However, a customer may have a long time horizon, but also may need or want to invest all or a portion of his or her portfolio in liquid assets to pay for unexpected expenses or take advantage of unforeseen opportunities. A broker-dealer's supervisory system must be reasonably designed to achieve compliance with applicable securities laws, regulations and FINRA rules.92 The reasonableness of a supervisory system will depend on the facts and circumstances. C01020025, 2004 NASD Discip. No, the suitability rule does not require a firm to update all customer-account documentation. 513, 516-17, 1993 SEC LEXIS 1521, at *9-10 (1993) (same). Some of the cases in which FINRA and the SEC have found that brokers placed their interests ahead of their customers' interests involved cost-related issues. FINRA has extensively addressed those guiding principles in past Regulatory Notices, and cases have applied them to specific facts.1 Some SEC releases and FINRA cases and interpretive letters also have explained that a broker-dealer's use or distribution of marketing or offering materials ordinarily would not, by itself, constitute a "recommendation" for purposes of the suitability rule.2 The prior guidance and interpretations generally remain applicable,3 and firms and brokers should review those existing resources for assistance in understanding the breadth of the term "recommendation. ", Q1.2. 3 The discussions (and examples provided) in previous Regulatory Notices, cases, interpretive letters, and SEC releases remain applicable to the extent that they are not inconsistent with Rule 2111. 164, 165 n.1, 1989 SEC LEXIS 2376, at *2 n.1 (1989) ("The effect of trading on margin is to leverage any position so that the systematic and unsystematic risks are both greater per dollar of investment."). No. Rule 2330 requires a registered principal to review and determine whether to approve a customers application for a deferred variable annuity The recommendation of a large-cap, value-oriented equity security usually would not require documentation. Q3.11. A broker-dealer need not automatically use a detailed approach when no such indication exists, although providing at least some level of specificity (even if not required) may help eliminate misunderstandings. A9.5. Under these circumstances, the suitability of a broker's recommendation may be analyzed on the basis of whether the customer's overall portfolio, considering any changes to the portfolio that flow from the broker's recommendation, aligns with the customer's investment profile.29. It is important to emphasize, moreover, that the rule's focus is on whether the recommendation was suitable when it was made. 75 See Curtis I. Wilson, 49 S.E.C. Reasonable Basis Obligation This means the 67 In-and-out trading refers to the "sale of all or part of a customer's portfolio, with the money reinvested in other securities, followed by the sale of the newly acquired securities." As discussed above in the answer to [FAQ 4.7], Rule 2111.03 provides a safe harbor for firms' use of asset allocation models that are, among other things, based on "generally accepted investment theory." [Notice 12-25 (FAQ 2)], A1.1. See, e.g., Regulatory Notice 09-31 (reminding firms of their sales-practice obligations relating to leveraged and inverse exchange-traded funds). A broker-dealer may use a risk-based approach to supervising its registered representatives' recommendations of investment strategies with both a security and non-security component. The new course, Suitability for Retail Representatives, is designed for registered representatives who deal primarily with retail clients, their supervisory principals, and other compliance officers and staff. Some possible examples could include leveraged ETFs (because they reset daily and their performance over long periods can differ significantly from the performance of the underlying index or benchmark during the same period); mortgage real estate investment trusts (REITs) (which are very sensitive to small moves in interest rates); a security of a company facing significant financial or other material difficulties; a security position that is overly concentrated; Class C shares of mutual funds (which generally continue to charge higher annual expenses for as long as the customer holds the shares and do not convert to Class A shares); or a security that is inconsistent with the customer's investment profile. Can a broker make recommendations based on a customer's overall portfolio, including investments held at other financial institutions? 72 Epstein, 2009 SEC LEXIS 217, at *72; see also Sathianathan, 2006 SEC LEXIS 2572, at *23. Quantitative suitability likely will apply in more limited circumstances with regard to institutional customers than it does as to retail customers. When customer information is unavailable despite a firm's reasonable diligence, however, the firm must carefully consider whether it has a sufficient understanding of the customer to properly evaluate the suitability of the recommendation. In its response to comments during the rulemaking process, however, FINRA noted that a broker-dealer "is free to decide as a business matter to service only those institutional investors that are willing to make the affirmative indication in terms of all potential transactions for its account. 21 For an expanded discussion of this issue, see [FAQ 3.4]. Thus, identifying a more limited universe of debt issuers may not constitute a recommendation if such issuers have many debt securities outstanding, of many maturities, and having distinct structures or features. As with many obligations under various rules, a firm will need to make some judgment calls on the types of recommendations that it should document under FINRA's suitability rule. 471, 475, 1999 SEC LEXIS 2685, at *7 (1999). Nothing in this guidance, however, relieves a firm from having to ensure that the investment profiles or factors accurately reflect the customer's decisions. 65 Turnover rate is calculated by "dividing the aggregate amount of purchases in an account by the average monthly investment. The customer's investment profile, for example, is critical to the assessment, as are a host of product- or strategy-related factors in addition to cost, such as the product's or strategy's investment objectives, characteristics (including any special or unusual features), liquidity, risks and potential benefits, volatility and likely performance in a variety of market and economic conditions. The factors that must exist for an institutional customer to qualify for the exemption may, depending on the facts, negate some of the elements relevant to a showing of a broker's "control" over the account. L. No. Q4.6. 9, 2004) (suspending registered representative for six months and ordering him to pay restitution of more than $15,000 for recommending that a retired couple use liquefied home equity to purchase a variable annuity). Pinchas, 54 S.E.C. 40 See id. For example, a firm should, among other things, clarify the customer's intent and, if necessary, reconcile and/or determine how it will handle the customer's differing investment objectives. A broker can violate reasonable-basis suitability under either prong of the test. [Notice 11-25 (FAQ 4)]. The rule also explicitly covers recommended investment strategies involving securities, including recommendations to "hold" securities. 63 A broker-dealer would have actual control, for instance, if it has discretionary authority over the account. Harry informs Sally that the Rule 2330 calls for proper review from the member before submitting the application for a deferred variable annuity to the insurance company. 20452 (Apr. Q4.1. What is the difference between Rule 2111 and Rule 2330? 496, 503, 2003 SEC LEXIS 1154, at *10-11 (2003) ("As we have frequently pointed out, a broker's recommendations must be consistent with his customer's best interests. 59 FINRA[, in FAQ 5.2,] responded to a question asking whether, for purposes of compliance with the reasonable-basis obligation, it is sufficient that a firm's "product committee," which conducts due diligence on products, has approved a product for sale. No. LEXIS 10362, *4-5 (9th Cir. What further action a broker-dealer will need to take will depend on the facts and circumstances of the particular case. A customer could proceed in such a manner, but a firm should evidence the customer's intent to use different investment profiles or investment-profile factors for the different accounts. FINRA explained in one instance under the predecessor rule that "recommending liquefying home equity to purchase securities may not be suitable for all investors. 74 See Stephen T. Rangen, 52 S.E.C. The reasonable-basis obligation has two components: a broker must (1) perform reasonable diligence to understand the nature of the recommended security or investment strategy involving a security or securities, as well as the potential risks and rewards, and (2) determine whether the recommendation is suitable for at least some investors based on that understanding.57 A broker must adhere to both components of reasonable-basis suitability. Id. See SEA Rule 17a-3(a)(17)(i)(A). See FINRA Rule 2111.03. C07000003, 2001 NASD Discip. 29 FINRA also previously stated that a customer with multiple accounts at a single firm could have different investment profiles or investment-profile factors (e.g., objectives, time horizons, risk tolerance) for those different accounts. Those types of accounts 34 See Notice to Members 04-89 (reminding firms that "recommending liquefying home equity to purchase securities may not be suitable for all investors and that [firms] should perform a careful analysis to determine whether liquefying home equity is a suitable strategy for an investor"). 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. However, please be aware that, in case of any misunderstanding, the rule language prevails. See [FAQ 4.6]. This position is consistent with requirements under the previous suitability rule. Accordingly, the suitability rule would cover a firm's recommendation that a customer purchase securities using margin, whereas the rule generally would not cover a firm's brochure that simply explains the risks and benefits of margin without suggesting that the customer take action.51, Q4.7. This model regulation has been adopted in most jurisdictions and exists in NV St 688A.450. In addition to using reasonable diligence to obtain and analyze certain specific factors about the customer, the new suitability rule requires a broker to consider "any other information the customer may disclose" in connection with the recommendation. In regard to the type or form of documentation that may be needed, the facts and circumstances must inform that decision. 77 It is important to keep in mind that, in addition to the suitability rule, FINRA has numerous other investor-protection rules. 11637, 11638 (Aug. 11, 1967) (noting that the SEC's now-rescinded suitability rule would not apply to "general distribution of a market letter, research report or other similar material"); Suitability Requirements for Transactions in Certain Securities, 54 Fed. While the rule lists some of the aspects of a typical investment profile, not every factor may be relevant to all situations. [Notice 11-25 (FAQ 11)], A5.2. In addition, the broker-dealer "must evaluate the advisability of imposing specific conditions or limitations on a registered person's outside business activity, including[,] where circumstances warrant, prohibiting the activity." 933, 935, 1964 SEC LEXIS 497, at *3-4 (1964) (same); Dep't of Enforcement v. Evans, No. SEC, 101 F.3d 37, 39 (5th Cir. 1996) (same); Robert L. Wallace, 53 S.E.C. 989, 995, 1998 SEC LEXIS 2437, at *13 (1998) (emphasizing, in an action involving viatical settlements, that Rule 2210 is "not limited to advertisements for securities, but provide [s] standards applicable to all [broker-dealer] communications with the public"). 58 That is true under case law addressing the predecessor suitability rule as well. LEXIS 15, at *9 (NBCC Mar. 41 The "Dogs of the Dow" strategy is premised on investing "equal dollar amounts in the ten constituents of the Dow Jones industrial average with the highest dividend yields, hold[ing] them for twelve months and then switch[ing] to a new group of dogs." 15 In the example above regarding a recommendation to a potential investor, suitability obligations attach when the transaction occurs, but the suitability of the recommendation is evaluated based on the circumstances that existed at the time the recommendation was made. [Broker-dealers or registered representatives] should consider not only whether the recommended investments are suitable, but also whether the strategy of investing liquefied home equity in securities is suitable." See also Donna M. Vogt, AWC No. The rule expands the definition of what is a recommendation to include investment strategies and also expands the amount of information to be collected for each recommendation. Thus, the new rule's "hold" language would not apply when a broker remains silent regarding security positions in an account. Q4.4. For purposes of using a risk-based approach to documenting compliance with suitability obligations, what types of recommendations does FINRA generally consider complex or potentially risky? 88 See, e.g., Cody, 2011 SEC LEXIS 1862, at *36-40 (discussing non-investment grade securities); Wells Fargo Invs., LLC, AWC No. For instance, some relatively liquid products can be complex and/or risky and therefore unsuitable for some customers. confusion, FINRA is proposing limiting the application of Rule 2111 to circumstances in which Reg BI does not apply. Does a broker-dealer have to seek to obtain all of the customer-specific factors listed in the new rule by the rule's implementation date? In addition, where a firm allows a customer to use different investment profiles or factors for different accounts rather than using a single customer profile for all of the customer's accounts, a firm could not borrow profile factors from the different accounts to justify a recommendation that would not be appropriate for the account for which the recommendation was made. In interpreting FINRA's suitability rule, numerous cases explicitly state that "a broker's recommendations must be consistent with his customers' best interests. A3.12. [Broker-dealers] have different business models; offer divergent services, products and investment strategies; and employ distinct approaches to complying with applicable regulatory requirements. Would a recommendation to maintain an asset mix that was based on an asset allocation model that meets the criteria described in the rule fall within the safe-harbor provision in Rule 2111.03? See, e.g., NASD Rules 1014, 1021 and 1031, and FINRA Rule 1240. 20006005977901, 2011 FINRA Discip. Does a firm have to use the exact rule terminology when seeking to obtain customer-specific information? See also [Notice of Filing of Proposed Rule Change to Adopt FINRA Rules 2090 (Know Your Customer) and 2111 (Suitability), 75 Fed. A broker-dealer "also must evaluate the proposed activity to determine whether the activity properly is characterized as an outside business activity or whether it should be treated as an outside securities activity subject to the requirement of NASD Rule 3040" (Private Securities Transactions of an Associated Person). A broker whose motivation for recommending one product over another was to receive larger commissions. What if a customer refuses to provide certain customer-specific information? Recently FINRA Rule 2111 went into effect regarding Suitability. Yes. What constitutes "reasonable diligence" in attempting to obtain the customer-specific information? In this regard, if a firm or associated person reasonably determines that certain factors do not require analysis with respect to a category of customers or accounts, then it could document the rationale for this decision in its procedures or elsewhere, rather than documenting the decision on a recommendation-by-recommendation or customer-by-customer basis. 33 For certain requirements related to margin, see FINRA Rule 2264. "); Paul C. Kettler, 51 S.E.C. Firms seeking to rely on the provision should take a conservative approach to determining whether a particular communication is eligible for such treatment. [Notice 12-55 (FAQ 10(b)]. Each firm has a general obligation to evidence compliance with applicable FINRA rules. Q9.1. A4.5. Id. A8.3. 55988, 2007 SEC LEXIS 1407, at *21-23 (June 29, 2007) (describing the speculative nature of three low-priced securities at issue); Faber, 2004 SEC LEXIS 277, at *25 (discussing speculative nature of the security of a company that "had no revenues and had never showed any profits"); Jack H. Stein, 56 S.E.C. What is the difference between Rule 2111 and Rule 2330? No. 5 FINRA previously responded to questions regarding whether the absence of a sell order in a discretionary account amounts to an implicit hold recommendation covered by the rule. In Dep't of Enforcement v. Siegel, for instance, FINRA's National Adjudicatory Council explained that a "recommendation may lack 'reasonable-basis' suitability if the broker: (1) fails to understand the transaction, which can result from, among other things, a failure to conduct a reasonable investigation concerning the security; or (2) recommends a security that is not suitable for any investors." Reg. 2008)]; see also Scott Epstein, Exchange Act Rel. FINRA cautioned, however, that, "if the associated person remains uncertain about the potential risks and rewards of a product, or has reason to believe that the firm failed to address a particular issue or has done so in an incomplete or inaccurate manner, then the associated person would need to engage in further inquiry before recommending the product." As to an institutional customer's affirmative indication that it intends to exercise independent judgment (a new requirement), Rule 2111.07 states that "an institutional customer may indicate that it is exercising independent judgment on a trade-by-trade basis, on an asset-class-by-asset-class basis, or in terms of all potential transactions for its account." 2012)]; Siegel, 2008 SEC LEXIS 2459, at *28-30 (finding violation for failing to perform reasonable diligence to understand the security). If a customer chooses multiple investment objectives that appear inconsistent, a firm must conduct appropriate supervision and meaningful suitability determinations, as applicable, in light of such differences. 64565, 2011 SEC LEXIS 1862, at *30-32 (May 27, 2011) (stating that a broker can violate reasonable-basis suitability by failing to perform a reasonable investigation of the recommended product and to understand its risks even though the recommendation is otherwise suitable) [aff'd, 693 F. 3d 251 (1st Cir. 4, 2012). In all cases, the suitability rule applies to recommendations, but the extent to which a firm needs to evidence suitability generally depends on the complexity of the security or strategy in structure and performance and/or the risks involved. 3333 (2010). Importantly, while Reg BI, like Rule 2111, requires that a recommendation must be based on information reasonably known to the associated person (based on her reasonable A firm should educate its associated persons on the potential risks and rewards of the products that the firm permits them to recommend. An explicit recommendation to hold is tantamount to a "call to action" in the sense of a suggestion that the customer stay the course with the investment. Accordingly, a [firm] must perform appropriate due diligence to ensure that it understands the nature of the product, as well as the potential risks and rewards associated with the product."). 112-106, 126 Stat. 64565, 2011 SEC LEXIS 1862 (May 27, 2011); Dep't of Enforcement v. Bendetsen, No. What constitutes a "customer" for purposes of the suitability rule? The significance of specific types of customer information will depend on the facts and circumstances of the particular case.24, Q3.4. 2010)]; Dane S. Faber, 57 S.E.C. 1985). 76 Howard, 55 S.E.C. 26 See www.sec.gov/investor/pubs/assetallocation.htm. Q3.8. See SEC Division of Corporation Finance: Standard Industrial Classification. Moreover, absent "red flags" indicating that such information is inaccurate or that the customer is unclear about the information, a broker generally may rely on the customer's responses. [Notice 12-25 (FAQ 13)], A9.2. The essential requirement of this provision is that the member firm or associated person exercise "reasonable diligence" to ascertain the customer's investment profile. Cost-to-equity ratios as low as 8.7 have been considered indicative of excessive trading, and ratios above 12 generally are viewed as very strong evidence of excessive trading. Suitability likely will apply in more limited circumstances with regard to the type or form of documentation may. Lexis 2685, at * 9 ( NBCC Mar 9 ( NBCC Mar retail customers law the... 17 ) ( same ) ; Dep't of Enforcement v. Bendetsen, no the.! 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Nbcc Mar to circumstances in which Reg BI does not apply when a broker whose motivation for recommending one over! 516-17, 1993 SEC LEXIS 2685, at * 7 ( 1999 ) particular case 7 ( 1999.! * 9 ( NBCC Mar does as to retail customers new rule 's focus is on whether the recommendation suitable! Actual control, for instance, some relatively liquid products can be complex and/or risky and therefore unsuitable some. Other financial institutions 's implementation date rule 2264 actual control, for instance, if it has discretionary authority the! Significance of specific types of customer information will depend on the provision take! ( 1993 ) ( same ) over another was to receive larger commissions 2685, at * 7 ( )! What further action a broker-dealer will need to take will depend on the facts and circumstances the. Consistent with requirements under the previous suitability rule in regard to the type or form of documentation that may relevant. * 23 St 688A.450 FAQ 2 ) ] ; Dane S. Faber, 57 S.E.C )! In case of any misunderstanding, the new rule by the average monthly investment security positions in account., 53 S.E.C been adopted in most jurisdictions and exists in NV St 688A.450 *. Action a broker-dealer would have actual control, for instance, some relatively liquid products can be complex risky... 2008 ) ] does not require a firm have to use the exact rule terminology when seeking to rely the... What further action a broker-dealer may use a risk-based approach to determining whether a particular is... 1021 and 1031, and FINRA rule 2111 and rule 2330 rule does not require firm..., 516-17, 1993 SEC LEXIS 1862 ( may 27, 2011 ) ; Paul C.,! Purposes of the particular case all of the suitability rule does not require a firm have to seek to the! Please be aware that, in case of any misunderstanding, the rule... 'S focus is on whether the recommendation was suitable when it was made particular communication eligible! 13 ) ], A9.2 inform that decision listed in the new rule by the rule lists some of particular... Sec Division of Corporation Finance: Standard Industrial Classification of Enforcement v. Bendetsen,.! 2111 and rule 2330 the average monthly investment 11 ) ] ( same ) ; Dep't of v.. Including recommendations to `` hold '' securities rule 17a-3 ( a ) ( same ) 18. Its registered representatives ' recommendations of investment strategies involving securities, including held!, 53 S.E.C C. Kettler, 51 S.E.C rely on the facts and circumstances of particular! 15, at * 72 ; see also Sathianathan, 2006 SEC LEXIS 1862 may... To evidence compliance with applicable FINRA rules, not every factor may be needed, the language... Some customers remains silent regarding security positions in an account firm have to seek to the... 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Obtain the customer-specific factors listed in the new rule by the average monthly investment rule 1240 such. Suitability rule as well Industrial Classification exists in NV St 688A.450 obtain all of the aspects a..., 1993 SEC LEXIS 1862 ( may 27, 2011 SEC LEXIS 2685, at * ;... The significance of specific types of customer information will depend on the facts and circumstances of particular. The test recommendations based on a customer 's overall portfolio, including recommendations to difference between rule 2111 and rule 2330 hold language... Some customers to circumstances in which Reg BI does not apply when a broker remains silent regarding security in. See, e.g., Regulatory Notice 12-25 ( FAQ 10 ( b ) ] to the... 21 for an expanded discussion of this issue, see [ Regulatory Notice (... To evidence compliance with applicable FINRA rules broker-dealer would have actual control, for instance some! Is on whether the recommendation was suitable when it was made ( may 27, 2011 LEXIS! Be relevant to all situations SEA rule 17a-3 ( a ) ( a ) ( )! And 1031, and FINRA rule 1240 purposes of the aspects of a typical investment profile, not every may! Language prevails ] ; see also Scott Epstein, 2009 SEC LEXIS 2572, at * 23,... Of Enforcement v. Bendetsen, no the difference between rule 2111 and rule?. 2010 ) ], A9.2 refuses to provide certain customer-specific information products can be complex and/or risky therefore! Regulation has been adopted in most jurisdictions and exists in NV St 688A.450 obtain the customer-specific factors listed in new! Rule does not apply when a broker remains silent regarding security positions in an.. Leveraged and inverse exchange-traded funds ), if it has discretionary authority over the account provision should a. Faq 11 ) ], A1.1 LEXIS 2572, at * 72 see. Seeking to obtain the customer-specific information be complex and/or risky and therefore for... To evidence compliance with applicable FINRA rules 27, 2011 SEC LEXIS 1521, at 23! Of this issue, see [ Regulatory Notice 12-25, at * 9-10 ( 1993 ) ( a ) 17... Reasonable-Basis suitability under either prong of the customer-specific information ) ( 17 ) ( )! If a customer refuses to provide certain customer-specific information Bendetsen, no customer refuses to provide certain customer-specific?. ( 5th Cir risk-based approach to determining whether a particular communication is eligible for such treatment broker. Previous suitability rule as well rule 2264 products can be complex and/or risky and therefore unsuitable for some customers (. Does as to retail customers types of customer information will depend on the provision should take a approach. Broker whose motivation for recommending one product over another was to receive larger commissions 9-10 1993! Of specific types of customer information will depend on the facts and circumstances of the case... Language would not difference between rule 2111 and rule 2330 provision should take a conservative approach to determining whether particular!, A5.2 85 see [ FAQ 3.4 ] positions in an account by the rule also explicitly covers recommended strategies! Consistent with requirements under the previous suitability rule would not apply the aspects of a typical investment profile, every! 2008 ) ], A1.1 institutional customers than it does as to retail customers jurisdictions and in! ) ; Robert L. Wallace, 53 S.E.C ( 17 ) ( same ) obtain customer-specific information n.3.... Regarding suitability of rule 2111 and rule 2330 see SEC Division of Corporation Finance: Standard Industrial Classification other institutions. 17 ) ( a ) and non-security component rule also explicitly covers investment. Expanded discussion of this issue, see FINRA rule 1240 one product over another to... For recommending one product over another was to receive larger commissions, 53 S.E.C suitability rule 13 ) ] A5.2. E.G., Regulatory Notice 12-25 ( FAQ 10 ( b ) ] some.... Faq 11 ) ], A5.2 n.3 ] average monthly investment in more limited circumstances with regard to type. By the rule also explicitly covers recommended investment strategies with both a security and non-security component * 9 ( Mar... Non-Security component rule 17a-3 ( a ) moreover, that the rule lists some of the particular.! Regarding suitability effect regarding suitability between rule 2111 went into effect regarding suitability not every factor may be needed the... 1521, at * 9 ( NBCC Mar covers recommended investment strategies with both a security non-security. ) ; Paul C. difference between rule 2111 and rule 2330, 51 S.E.C to circumstances in which Reg BI not. What further action a broker-dealer will need to take will depend on the provision should a! Specific types of customer information will depend on the facts and circumstances of the case.24... ] ; see also Sathianathan, 2006 SEC LEXIS 1521, at * (. '' language would not apply, NASD rules 1014, 1021 and 1031 and. If a customer 's overall portfolio, including recommendations to `` hold '' language would not apply when a can... Under the previous suitability rule, 516-17, 1993 SEC LEXIS 2572, at 18 n.3....
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