Changes to FINRA Rule 2210 may be coming. The FINRA, Financial Industry Regulatory Authority, Board of Governors met June 4-5, 2025. The Board approved two rule proposals, approved the appointments of new Advisory Committee members, met with Securities and Exchange Commission (SEC) Commissioner Mark Uyeda, and received updates on FINRA’s long-term financial planning and FINRA’s enterprise risk management and cybersecurity program.
The current version of FINRA Rule 2210 requires fair and balanced representations in communications that brokers and brokerages have with investors. The reason for this prohibition is to prevent the investing public from investing on false or misleading information they believe is from a trusted source. Further, any recommendation, such as this, must disclose any financial interest, such as stock options. Most important to the proposed amendment, the Rule prohibits the projection of investment performance of an investment or strategy.
The amendments are purportedly to “better align the regulatory requirements for broker-dealers and investment advisers related to performance projections in written communications to investors.” The amendments would create a narrowly tailored exception, or safe harbor, to the general prohibition on investment or strategy projections. The amended rule would permit the presentation of projected performance and targeted returns when members meet specified conditions, including adopting internal rules, having a reasonable basis for the criteria and assumptions made in calculating the projections or targeted returns, and providing specified information. The amendments will be filed with the SEC for approval.
FINRA is a not-for-profit organization, self-regulatory organization, dedicated to investor protection and market integrity. It is created by the securities brokerage industry to oversee the securities brokerage industry. FINRA regulates just one part of the securities industry, brokerage firms. FINRA is overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public.
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