Institutional Customer Suitability: New Compliance Certificate for Broker-Dealers


As of July 9, broker-dealers must comply with the new suitability standards established by FINRA Rule 2111 (which is modeled after NASD Rule 2310). With respect to customers’ institutional accounts (as defined by FINRA Rule 4512(c)), broker-dealers will be required to fulfill customer-specific suitability obligations by having: a reasonable basis to believe that the institutional customer is capable of evaluating investment risks independently and the institutional customer affirmatively indicate that it is exercising independent judgment in evaluating the broker-dealer’s recommendations.

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