Structured Thoughts: News for the financial services community - Volume 1, Issue 13 - October 2010

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IN THIS ISSUE:

Suitability Update………page 1; Ratings Update…………page 2; Basel III………….………page 2; Structured Certificates of Deposit: A Primer………page 3

Suitability Update

In connection with its continuing process of reconciling regulations as part of the FINRA consolidated rulebook, FINRA had proposed changes to FINRA Rule 2090, the know your customer rule, and Rule 2111, the suitability rule. In late August 2010, the final proposed rules were published for comment and the comment period closed last month.

The final proposed rules would implement a number of changes. Suitability determinations would apply to recommended investment strategies, not only to recommendations relating to specific securities. There are three elements or components of suitability identified by the rule: reasonable basis suitability, customer specific suitability and quantitative suitability. In considering quantitative suitability, the broker-dealer should make a determination that a series of transactions, when viewed together, would be considered suitable for the client.

Please see full newsletter below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Morrison & Foerster LLP | Attorney Advertising

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