Never miss a story — sign up for PLANADVISER newsletters to keep up on the latest retirement plan adviser news.
Compliance February 23, 2012
SIFMA Develops Certificate for FINRA Rule 2111
The Securities Industry and Financial Markets
Association (SIFMA) developed an Institutional Suitability Certificate to facilitate
broker/dealer compliance with new FINRA Rule 2111, specifically when dealing
with institutional clients.
Reported by Corie Russell
The Financial Industry Regulatory Authority’s (FINRA) Rule 2111 establishes new suitability requirements that broker/dealers must satisfy when recommending transactions or investment strategies involving securities to clients. The rule provides an exception from the “customer-specific” suitability obligation for institutional accounts (as defined in FINRA Rule 4512(c)) that are capable of evaluating risks independently and affirmatively indicate to broker/dealers that they are exercising independent judgment in evaluating a firm’s securities recommendations.
The Institutional Suitability Certificate is a form that institutional clients can sign to make this indication.
“This form will provide an efficient way for institutional investors to elect to be treated as an institutional account by their broker/dealer(s), with access to the full range of products and services available on their broker/dealer’s institutional platform,” said Ira Hammerman, SIFMA senior managing director and general counsel.
The Institutional Suitability Certificate is available here and will be distributed and maintained by various vendors starting on or around March 1, 2012.
The deadline for compliance with FINRA Rule 2111 is July 9, 2012.