The Financial Industry Regulatory Authority will not eliminate its suitability rule in light of the Securities and Exchange Commission’s Regulation Best Interest, and plans to submit to its board shortly a rule proposal on sales contests and FINRA’s suitability rule “to conform them to Reg BI,” the broker-dealer regulator’s chief legal officer said Monday.
“We’re not going to get rid” of the suitability rule — Rule 2111 — Bob Colby, FINRA’s chief legal officer, told attendees Monday at the National Society of Compliance Professionals’ annual meeting in Baltimore.
Colby told ThinkAdvisor that he wanted to assure attendees that FINRA’s suitability rule and Reg BI “are not going to be in conflict. They’re very close to begin with.”
FINRA’s suitability rule covers more investors — including institutions — than the SEC’s Reg BI does, Colby told ThinkAdvisor. “I think what we’ll say [in our proposal to the SEC] is if the recommendation is for retail accounts, it’s covered by Reg BI and it will be covered by our suitability rule.”