At a glance
- Broker-dealers that also run advisory businesses may be quickest to use the new exception, InvestmentNews reported, because its conditions track the SEC's Marketing Rule.
- The exception requires written policies tying each communication to the audience's likely financial situation and objectives.
- For dually registered firms, that means existing Marketing Rule policies may provide a starting point for the broker-dealer side.
The SEC approved amendments to FINRA Rule 2210 this month, as Private Wealth Daily previously reported, adding a fourth exception to the ban on communications that project performance. Broker-dealers that also run advisory businesses may be quickest to use the new exception, InvestmentNews reported, because its conditions track the SEC's Marketing Rule. The existing three exceptions cover mathematical illustrations, certain analysis tools and research price targets.
The exception requires written policies tying each communication to the audience's likely financial situation and objectives. Firms must also disclose assumptions, risks and limitations, and keep records showing where a projection came from. Eversheds Sutherland counsel Andrew Mount told InvestmentNews the text borrows nearly word for word from the Marketing Rule's hypothetical-performance conditions.
For dually registered firms, that means existing Marketing Rule policies may provide a starting point for the broker-dealer side. FINRA said projections should go only to investors able to evaluate them, so the change mainly touches institutional and sophisticated clients rather than mass retail.
Reported by the RIA desk from InvestmentNews. Published . Corrections