SEC Approves FINRA Suitability and Know-Your-Customer Rules
Posted by William Byrnes on February 26, 2011
The SEC recently approved FINRA proposed rules—FINRA Rules 2090 and 2011—that amend and consolidate know-your-customer and suitability obligations for broker-dealers and their authorized representatives. The new rules are based on, and replace in-part, similar NYSE and NASD rules. According to FINRA, the amended know-your-customer and suitability rules are intended to protect investors by “promoting fair dealing with customers and ethical sales practices.”
The new rules are effective as of October 7, 2011. For previous coverage of the suitability standard and the debate over the proposed fiduciary standard in Advisor’s Journal, see What You Don’t Know Yet Might Hurt You: A Broker’s Duties under the Financial Reform Act (CC 10-40) and Study Finds that Universal Fiduciary Standard Will Hurt Investors (CC 10-97).
Under the know-your-customer rule, firms are required to use reasonable diligence respecting the opening and maintenance of every account and to know essential facts about every customer. “Essential facts” are facts required to …. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).
This entry was posted on February 26, 2011 at 05:06 and is filed under Compliance. Tagged: Broker-dealer, Dodd–Frank Wall Street Reform and Consumer Protection Act, Fiduciary, Financial Industry Regulatory Authority, Mary Schapiro, New York Stock Exchange, Registered Investment Advisor, U.S. Securities and Exchange Commission. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.