What You Must Know
- The change would enable broker-dealers to venture the efficiency or present a focused return in advertising and marketing communications.
- The rule would apply to institutional communications or these distributed solely to certified purchasers, not retail buyers.
- FINRA’s proposal aligns with the SEC’s Funding Advisor Advertising rule.
The Monetary Business Regulatory Authority has filed to deliver FINRA Rule 2210, Communications with the Public, in keeping with the Securities and Change Fee’s advertising and marketing rule.
The proposed rule change would enable broker-dealers to offer “projected efficiency or focused returns in advertising and marketing communications” to institutional buyers and certified purchasers, Russell Fecteau, of counsel at Davis Wright Tremaine LLP in Washington, informed ThinkAdvisor Tuesday in an e mail.
Companies that do might want to “fulfill sure circumstances,” he stated, “together with however not restricted to adopting relevant written insurance policies and procedures and having an affordable foundation for the standards and assumptions made in calculating the projected efficiency or focused return.”
The federal securities legal guidelines and FINRA guidelines, added Fecteau, a former senior enforcement lawyer at FINRA, “have lengthy acknowledged that sure forms of subtle buyers, notably institutional buyers and sure certified purchasers on this case, want much less safeguards than different forms of buyers on the subject of evaluating advantages and dangers for funding choices.”
Because it stands now, Rule 2210 prohibits projections of efficiency or focused returns in member communications, topic to specified exceptions.
The proposed rule change aligns with the SEC’s funding advisor advertising and marketing rule and “may present efficiencies for companies if the modifications are adopted,” Fecteau stated.