SEC Approves Consolidated FINRA Rules Governing Know-Your-Customer and Suitability Obligations

FINRA Regulatory Notice

FINRA issued a regulatory notice to alert firms of the SEC's approval of new know-your-customer and suitability rules and to establish the effective date of the new rules as October 7, 2011. New FINRA Rules 2090 (Know Your Customer) and 2111 (Suitability) are modeled after NYSE Rule 405(1) and NASD Rule 2310, respectively. Among other things, the new rules amend the previous rules by (i) applying the suitability rule to investment "strategies" as well as "recommendations"; (ii) expanding the types of information firms must consider in assessing a customer's investment profile; and (iii) limiting the exemption to the suitability rules for institutional investors.

Please contact any of the following Cadwalader attorneys if you have any questions about this item:

Steven Lofchie; [email protected]

Jeffrey Robins; [email protected]

Maurine Bartlett; [email protected]

Glen Barrentine; [email protected]

Document Number

FINRA RN 11-02

Date

January 11, 2011

Cross References (links may require a Cabinet subscription)

FINRA Rule 2090, 2111