FINRA’S NEW RULES REQUIRE BROKER CHANGES AND NEW STRATEGIES

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FINRA’S NEW RULES REQUIRE BROKER CHANGES AND NEW STRATEGIES

A recent Reuters.com article explains the complex details of the new two FINRA rules coming into effect on July 2, 2012. FINRA’s Know Your Customer Rule and Suitability Rule require firms to use due diligence when dealing with customers. According to the article, the new rules will also now require customers to provide detailed information about their investment needs and themselves.

The Know Your Customer Rule requires diligence on the part of brokers to have all the documents necessary to fully understand the wants and needs of their customers. It also places a responsibility on the customer to provide such documents. The Suitability Rule demands a level of diligence on both parties and requires a customer to provide what is necessary for a broker to decide what is suitable.  The Rule requires brokers to base all recommendations off a complete customer investment profile. FINRA also establishes three factors for consideration when determining if a communication is a recommendation and thus would fall under this rule.


If you or someone you know has lost money as a result of a securities transaction, please contact Richard Frankowski at 205-747-1903 to discuss your potential legal remedies.

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