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  • 200. DUTIES AND CONFLICTS

    • 201. Standards of Commercial Honor and Principles of Trade

      All capital acquisition brokers are subject to FINRA Rule 2010.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 202. Use of Manipulative, Deceptive or Other Fraudulent Devices

      All capital acquisition brokers are subject to FINRA Rule 2020.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 203. Engaging in Distribution and Solicitation Activities with Government Entities

      All capital acquisition brokers are subject to FINRA Rule 2030.

      Adopted by SR-FINRA-2017-027 eff. Dec. 6, 2017.

      Selected Notice: 17-37.

    • 204. Payments to Unregistered Persons

      All capital acquisition brokers are subject to FINRA Rule 2040.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 207. Transactions Involving FINRA Employees

      All capital acquisition brokers are subject to FINRA Rule 2070.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 208. Expungement of Customer Dispute Information from the Central Registration Depository (CRD) System

      All capital acquisition brokers are subject to FINRA Rules 2080 and 2081.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 209. Know Your Customer

      Every capital acquisition broker shall use reasonable diligence to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer. For purposes of this Rule, facts "essential" to "knowing the customer" are those required to (a) effectively service the customer, (b) understand the authority of each person acting on behalf of the customer, and (c) comply with applicable laws, regulations and rules.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 211. Suitability

      (a) A capital acquisition broker or an associated person of a capital acquisition broker must have a reasonable basis to believe that a recommended transaction or investment strategy (as defined in FINRA Rule 2111) involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the broker or associated person to ascertain the customer's investment profile. A customer's investment profile includes, but is not limited to, the customer's age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information the customer may disclose to the capital acquisition broker or associated person of a capital acquisition broker in connection with a recommendation. The capital acquisition broker or associated person may not disclaim any responsibilities under this Rule.
      (b) The capital acquisition broker or associated person fulfills the customer-specific suitability obligation for an institutional investor, if (1) the broker or associated person has a reasonable basis to believe that the institutional investor is capable of evaluating investment risks independently, both in general and with regard to particular transactions and investment strategies involving a security or securities and (2) the institutional investor affirmatively indicates that it is exercising independent judgment in evaluating the broker's or associated person's recommendations. Where an institutional investor has delegated decision-making authority to an agent, such as an investment adviser or a bank trust department, these factors will be applied to the agent.

      • • • Supplementary Material: --------------

      .01 Reasonable Basis Suitability Obligation. Rule 211 requires a capital acquisition broker to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. In general, what constitutes reasonable diligence will vary depending on, among other things, the complexity of and risks associated with the security or investment strategy and the capital acquisition broker's or associated person's familiarity with the security or investment strategy. A capital acquisition broker's or associated person's reasonable diligence must provide the capital acquisition broker or associated person with an understanding of the potential risks and rewards associated with the recommended security or strategy. The lack of such an understanding when recommending a security or strategy violates the suitability rule.

      .02 Institutional Investor Exemption. Rule 211(b) provides an exemption to customer-specific suitability regarding institutional investors if the conditions delineated in that paragraph are satisfied. With respect to having to indicate affirmatively that it is exercising independent judgment in evaluating the capital acquisition broker's or associated person's recommendations, an institutional investor may indicate that it is exercising independent judgment on a transaction-by-transaction basis, on an asset-class-by- asset-class basis, or in terms of all of its potential transactions.

      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 221. Communications with the Public

      (a) No communication with the public by a capital acquisition broker may:
      (1) include any false, exaggerated, unwarranted, promissory or misleading statement or claim;
      (2) omit any material fact or qualification if the omission, in light of the context of the material presented, would cause the communication to be misleading;
      (3) state or imply that FINRA, or any other corporate name or facility owned by FINRA, or any other regulatory organization endorses, indemnifies, or guarantees the capital acquisition broker-dealer's business practices; or
      (4) imply that past performance will recur or make any exaggerated or unwarranted claim, opinion or forecast.
      (b) All communications by a capital acquisition broker must be based on principles of fair dealing and good faith, must be fair and balanced, and must provide a sound basis for evaluating the facts in regard to any particular security or type of security, industry, or service.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 226. Arbitration Requirements

      (a) Arbitration Disclosure to Associated Persons Signing or Acknowledging Form U4
      All capital acquisition brokers are subject to FINRA Rule 2263.
      (b) Requirements When Using Predispute Arbitration Agreements for Customer Accounts
      All capital acquisition brokers are subject to FINRA Rule 2268.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.

    • 240. Engaging in Impermissible Activities

      Upon a finding that a capital acquisition broker or associated person of a capital acquisition broker has engaged in activities that require the firm to register as a broker or dealer under the Exchange Act, and that are inconsistent with the limitations imposed on capital acquisition brokers under Capital Acquisition Broker Rule 016(c), FINRA may examine for and enforce all FINRA rules against such a broker or associated person, including any rule that applies to a FINRA member broker-dealer that is not a capital acquisition broker or to an associated person who is not a person associated with a capital acquisition broker.
      Adopted by SR-FINRA-2015-054 eff. April 14, 2017.

      Selected Notice: 16-37.