FINRA Rule 2111 and Broker-Dealer Suitability Obligations

Summary

This practice note discusses the suitability obligations imposed on broker-dealers and their associated persons by Rule 2111 of the Financial Industry Regulatory Authority, Inc. (FINRA). As members of FINRA, broker-dealer firms and their associated persons are required to make investment recommendations that are suitable for investors. While the general concept of suitability is straightforward, the process of determining whether a firm or associated person (typically, a registered representative) made a suitable investment or investment strategy recommendation to a particular investor requires a nuanced analysis.