On June 19, the Financial Industry Regulatory Authority (FINRA) issued a regulatory notice that it had amended its Capital Acquisition Broker (CAB) suitability rule and rules governing non-cash compensation to align with the Securities and Exchange Commission’s Regulation Best Interest (Reg BI) with respect to the requisite standards of conduct.
Specifically, FINRA has amended its suitability rule, FINRA Rule 2111, to state that it will not apply to recommendations subject to Reg BI. Similarly, FINRA’s non-cash compensation rules have been amended so that the addressed arrangements must also be consistent with the applicable requirements of Reg BI.
These changes were approved by the SEC and become effective on June 30, 2020, the compliance date of Reg BI.
FINRA Regulatory Notice 20-18 is available here.