The SEC approved amendments to FINRA Rule 2210, that will allow broker-dealers to share projected performance and targeted returns under specified conditions. The changes expand flexibility while preserving safeguards around audience selection, disclosures, and recordkeeping.

The amendments are not yet effective. FINRA will announce the implementation date in a Regulatory Notice. Until then, firms must follow the existing requirements.

What Will Firms Need to Do?

To use the new exception, firms will need to:

  • Establish written procedures: Ensure communications are relevant to the intended audience’s likely financial situation and investment objectives.
  • Explain the numbers: Disclose the criteria, assumptions, risks, and limitations behind projections or targets.
  • Maintain records: Retain information about the source of each projection or targeted return.

Disclosures should also help investors understand fee treatment and why actual results may differ. Firms remain responsible for ensuring communications are fair, balanced, and not misleading.

Who Can Receive These Communications?

The exception generally will not support projections in materials distributed to a mass audience, including general retail advertising. FINRA expects these communications to primarily reach institutional and other sophisticated investors.

Firms will have flexibility to establish audience criteria, but distribution controls will matter. A presentation prepared for an eligible audience should not automatically become content for a public website or social media campaign.

The exception also does not broadly authorize other hypothetical performance, such as back tested or model results. Broker-dealers using projections supplied by an issuer or adviser must evaluate the source and available support rather than simply passing the numbers along.

Broader Communications Changes Remain Pending

Separately, FINRA’s Regulatory Notice 26-14 proposes additional changes, including:

  • Risk-based review: Letting firms determine which retail communications require principal approval before use.
  • Social media supervision: Removing the distinction between static and interactive content within the proposed review framework.
  • Streamlined standards: Revising certain filing requirements and rules for communications referencing past recommendations.

These proposed changes remain separate from the approved projections amendments and would require SEC approval before taking effect.

What Compliance Teams Can Take Away

Firms considering projections can begin preparing their controls:

  • Define distribution limits: Document intended audiences and how access will be restricted.
  • Prepare disclosures and records: Establish templates and retain supporting information.
  • Review third-party materials: Assess the source and support for sponsor-supplied projections.

The new flexibility comes with continued responsibility for how performance information is prepared, explained, and distributed.