FINRA Proposes Expanding Suitability to Non-Securities Activities
As part of consolidating the NYSE and NASD rulebooks, FINRA has requested comment on whether it should expand the suitability obligation to all recommendations whether or not such recommendations involve securities. The request comes buried in the Notice to Members announcing a consolidated suitability rule that essentially combines the old NASD and NYSE rules but adds little to a firm’s current obligations.
OUR TAKE: Broadening the suitability obligation beyond recommendations related to securities would significantly expand FINRA’s authority. If approved, activities such as insurance sales, estate planning, and financial planning would come under FINRA jurisdiction.