FINRA Requests Comment on Proposed Amendments to Rules Governing Communications with the Public

FINRA requested comment on proposed amendments to FINRA Rule 2210 (Communications with the Public). The proposed amendments would create an exception to the general prohibition on providing performance projections. The proposal would permit broker-dealers to distribute a "customized hypothetical investment planning illustration that includes the projected performance of an asset allocation or other investment strategy, but not an individual security."

The availability of the exception would be subject to several conditions, including that: (i) all assumptions, conclusions and recommendations have a "reasonable basis," (ii) the illustration has a clear and prominent disclosure that the illustration is "hypothetical and there is no assurance that any described performance or event will occur," and (iii) all material assumptions and limitations applicable to the illustration are disclosed. In addition, broker-dealers seeking to take advantage of the exception would have to implement specific supervisory procedures that would require a registered principal to either review and approve a template that would be used to generate the illustrations or review and approve each illustration before use or distribution.

Comments on the proposal must be submitted by March 27, 2017.