National Association of Securities Dealers (NASD) Rule 2310, the
clarify" its predecessors, NASD Rule 2310 and NYSE Rule 405(1).
Modeled after NASD Rule 2310
, FINRA Rule 2111 (Suitability) requires firms and advisors to more thoroughly justify their securities recommendations (even recommendations to "stay the course," notes Kelley) through greater information gathering and documentation.
If you recommend a security through a social media site, this triggers the requirements of NASD Rule 2310
When determining investment suitability, FINRAS Rule 2310
, Recommendations to Customers (Suitability), provides guidelines for the information you must obtain and the circumstances you must be aware of before recommending any security to any client.
NASD Rule 2310
requires that, before recommending the purchase, sale or exchange of a security, members must have a reasonable basis for believing that the transaction is suitable for the customer.
Another is Rule 2310, the "suitability" rule, which requires a broker-dealer to have reasonable grounds to believe a sales recommendation is suitable based on facts disclosed by the customer.
Buffie said the NASD believes that because of the complexity and many features available in variable products, the inherent long-term nature of the investment and the penalties for early surrender along with greater fees and expenses than some other securities, the suitability analysis required under Rule 2310 is even more complex.
If you do, you may trigger FINRA's Rule 2310
(on suitability), which may require prior approval and additional disclosures.
NASD Rule 2310 requires that a company recommending the purchase or sale of its securities to a customer must have a reasonable basis for believing that the recommendation is suitable for the customer.
The Underwriter Defendants, the Plaintiff claims, had an obligation to ensure that Vonage had complied with NASD Rule 2310 in setting up and administering the accounts of customers purchasing in the IPO.
5% of its IPO shares to Company customers in violation of Rule 2310
, which requires that a customer must have a reasonable basis for believing that the investment was suitable; (3) underwriter defendants violated the securities laws by allowing the improper action to continue.