At FINRA, A Highly Unusual Development  

The most important news regarding FINRA this summer has been the highly unusual activity pertaining to amendments to FINRA’s advertising rule (Rule 2210).  

The Amendments proposed by FINRA would permit projected performance and targeted returns in limited circumstances.  

The SEC approved FINRA’s proposal on July 19, but--in a highly unusual move—one of the Democratic Commissioners stayed the Division’s order that same day.  

As a result, to date, FINRA’s amendments have not taken effect.  

IPA is on record strongly supporting the proposed rule change, as the amendments essentially would permit performance projections and targeted returns concerning a security, asset allocation, or other investment strategy, in (1) institutional communications or (2) communications either to (A) qualified purchasers when the communication promotes or recommends a broker-dealer’s unregistered securities or (B) qualified purchasers or “knowledgeable employees” under Investment Company Act Rule 3c-5 when the communication promotes or recommends a private placement sold only to QPs or knowledgeable employees.   

 The amendments would impose conditions to help ensure that the projections have a reasonable basis, are accompanied by certain disclosures, and the broker-dealer has written policies and procedures reasonably designed to ensure that the communication is relevant to the likely financial situation and investment objectives of the audience.

We continue to monitor this issue closely for more developments and will keep you informed. https://ipa.com/summit2024/

FINRA also has announced that Joe Sheirer will replace Joe Price as Senior Vice President with responsibility for the Corporate Financing Department when Joe Price retires in November.  Joe Sheirer previously was Vice President of FINRA’s Member Supervision Examination Program. The Department’s Director, Paul Mathews, also is retiring but no replacement has been named.