Chief Compliance Officer Committee
Closed-End Investment Company Committee
Internal Sales Managers Roundtable
Sales and Marketing Committee
SEC Rules Committee
Small Funds Committee RE: ICI Draft Comment Letter on Proposed Amendments to FINRA Rule 2210
FINRA has issued a Regulatory Notice requesting comment on proposed amendments to Rule 2210 (Communications with the Public).[1] Notwithstanding the rule’s general prohibition on communications that predict or project performance, the proposed amendments would permit investment planning illustrations that include the projected performance of an asset allocation or other investment strategy (but not an individual security), subject to specified conditions.[2]
ICI’s draft comment letter (attached below) supports FINRA’s proposal. If adopted, it would permit FINRA member firms to provide their customers with a type of information—investment planning illustrations—that could help inform their investment decision-making. In addition, we recommend that the proposal be enhanced further by: (i) removing the “customization” requirement; and (ii) providing guidance regarding the precise scope of the proposed and existing exceptions to the rule’s general prohibition on projections, so that members can put them to wider and better use (e.g., in educational materials).
If you have any comments on the attached letter, please reach out to me (202-371-5406 or matt.thornton@ici.org) by March 20. Comments are due to FINRA by March 27.
Matthew Thornton
Assistant General Counsel
endnotes
[1] FINRA Requests Comment on Proposed Amendments to Rules Governing Communications with the Public, FINRA Regulatory Notice 17-06 (February 2017), available at: www.finra.org/sites/default/files/notice_doc_file_ref/Regulatory-Notice-17-06.pdf. See Institute Memorandum No. 30584, dated February 16, 2017, for a more detailed summary of the proposal.
[2] Specifically, the illustration would require a “reasonable basis” and certain disclosures, and would be subject to supervisory requirements.