A Narrow Fourth Exception

On October 15, 2026, the SEC approved FINRA’s proposed amendment to Rule 2210 (Communications with the Public), creating a fourth exception to the rule’s general prohibition on communications that predict or project performance.  Broker-dealers may now project performance or provide targeted returns with respect to a security, a securities portfolio, or an asset allocation or other investment strategy, subject to specified conditions.  The implementation date will be set by a forthcoming FINRA Regulatory Notice. 

What Broker-Dealers Must Do

The proposed rule change would require any broker-dealer that communicates projected performance or targeted returns to adopt and implement written policies and procedures.  These communications should only be provided to specific investors as the intended audience.

A member must adopt and implement written policies and procedures reasonably designed to ensure the communication is relevant to the likely financial situation and investment objectives of the intended audience.  This means that the projected performance or targeted returns communications should only go to investors who have the resources and financial expertise to understand its risks and limitations.  Members must provide sufficient information for the intended audience to understand the criteria used and assumptions made, and the risks and limitations of relying on the projection or target in making investment decisions.

FINRA expects the rule will primarily affect institutional and other sophisticated investors.  FINRA left members flexibility to build policies and procedures around investor categories, past experience with investors who have sought this information, or demonstrated interest in particular securities.  Compliance with the institutional suitability obligations of Rule 2111(b) would not be a substitute for the requirements of the proposed rule change, though a member may adopt dual-use procedures addressing both rules.  Projections still require diligence.  Members should evaluate the source and satisfy themselves that the presentation meets Rule 2210, even if every assumption is not independently verified.
FINRA also amended the recordkeeping obligation to capture information concerning the source of any projection or targeted return used.

FINRA did not recommend safe harbors for these communications, calculation methodologies, or disclosures.  FINRA also stated that materials prepared in compliance with the IA Marketing Rule would not not automatically satisfy Rule 2210.  It indicated that it would consider additional guidance on the proposed rule change if the Commission approves.
Nelson Mullins attorneys are available to discuss the steps necessary for broker-dealers to adopt policies and procedures following the Commission’s implementation of the proposed rule change.