Notice2026-10365
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change To Amend FINRA Rule 2210 (Communications With the Public)
Primary source
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Published
May 26, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 100 (Tuesday, May 26, 2026)</title>
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[Federal Register Volume 91, Number 100 (Tuesday, May 26, 2026)]
[Notices]
[Pages 30750-30751]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-10365]
[[Page 30750]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105524; File No. SR-FINRA-2026-004]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Instituting Proceedings To Determine Whether To
Approve or Disapprove a Proposed Rule Change To Amend FINRA Rule 2210
(Communications With the Public)
May 20, 2026.
I. Introduction
On February 10, 2026, the Financial Industry Regulatory Authority,
Inc. (``FINRA'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend FINRA Rule 2210
(Communications with the Public) to allow a member firm to project
performance or provide a targeted return with respect to a security, a
securities portfolio, or an asset allocation or other investment
strategy in its communications with the public, subject to certain
conditions.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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The proposed rule change was published for comment in the Federal
Register on February 25, 2026.\3\ The public comment period closed on
March 18, 2026. The Commission received comment letters in response to
the Notice.\4\ On April 7, 2026, FINRA consented to an extension of the
time period in which the Commission must approve the proposed rule
change, disapprove the proposed rule change, or institute proceedings
to determine whether to approve or disapprove the proposed rule change
to May 26, 2026.\5\ On May 18, 2026, the Commission received a letter
from FINRA stating that it is still considering comments on the
proposed rule change and anticipates submitting a response to comments,
as well as amendments to the proposed rule change, ``in the near
future.'' \6\
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\3\ See Exchange Act Release No. 104877 (Feb. 20, 2026), 91 FR
9308 (Feb. 25, 2026), File No. SR-FINRA-2026-004 (``Notice''),
<a href="https://www.govinfo.gov/content/pkg/FR-2026-02-25/pdf/2026-03705.pdf">https://www.govinfo.gov/content/pkg/FR-2026-02-25/pdf/2026-03705.pdf</a>.
\4\ The comment letters received in response to the Notice are
available at <a href="https://www.sec.gov/rules-regulations/public-comments/sr-finra-2026-004">https://www.sec.gov/rules-regulations/public-comments/sr-finra-2026-004</a>.
\5\ See letter from Joseph Savage, Vice President and Associate
General Counsel, Office of General Counsel, FINRA (Apr. 7, 2026),
<a href="https://www.finra.org/sites/default/files/2026-04/SR-FINRA-2026-004-Extension-5-26-2026.pdf">https://www.finra.org/sites/default/files/2026-04/SR-FINRA-2026-004-Extension-5-26-2026.pdf</a>.
\6\ Letter from David Driscoll, Associate General Counsel,
Office of General Counsel, FINRA (May 18, 2026), <a href="https://www.finra.org/sites/default/files/2026-05/SR-FINRA-2026-004-Response-to-Comments-20260518.pdf">https://www.finra.org/sites/default/files/2026-05/SR-FINRA-2026-004-Response-to-Comments-20260518.pdf</a>; see also supra note 4.
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The Commission is publishing this order pursuant to Section
19(b)(2)(B) of the Exchange Act \7\ to solicit comments on the proposed
rule change, and to institute proceedings to determine whether to
approve or disapprove the proposed rule change.
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\7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposed Rule Change
A. Background
1. FINRA Rule 2210 (Communications With the Public)
Among other things, FINRA Rule 2210 imposes restrictions on the
content of member firms' communications with the public. For example,
FINRA Rule 2210(d)(1) (General Standards) requires, among other things,
that: (1) a communication prepared by a member firm be based on
principles of fair dealing and good faith, be fair and balanced, and
provide a sound basis for evaluating the facts in regard to any
particular security or type of security, industry, or service; \8\ and
(2) the member firm preparing the communication: (a) not 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; \9\ (b) not make any false, exaggerated, unwarranted,
promissory, or misleading statement or claim in the communication; \10\
and (c) consider the nature of the audience to which the communication
will be directed and provide details and explanations appropriate to
the audience.\11\
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\8\ FINRA Rule 2210(d)(1)(A).
\9\ Id.
\10\ FINRA Rule 2210(d)(1)(B).
\11\ FINRA Rule 2210(d)(1)(E).
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These standards also generally prohibit a communication prepared by
a member firm from predicting or projecting performance, implying that
past performance will recur, or making any exaggerated or unwarranted
claim, opinion, or forecast.\12\ This general prohibition, however,
does not preclude communications that contain: (1) certain hypothetical
illustrations of mathematical principles; \13\ (2) certain investment
analysis tools or written reports produced by such investment analysis
tools; \14\ and (3) certain price targets contained in research reports
on debt or equity securities.\15\
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\12\ FINRA Rule 2210(d)(1)(F).
\13\ FINRA Rule 2210(d)(1)(F)(i) (stating that a member firm may
communicate a hypothetical illustration of mathematical principles,
provided that it does not predict or project the performance of an
investment or investment strategy).
\14\ FINRA Rule 2210(d)(1)(F)(ii) (stating that a member firm
may publish an investment analysis tool, or a written report
produced by an investment analysis tool, that includes projections
of performance provided it meets the requirements of FINRA Rule 2214
(Requirements for the Use of Investment Analysis Tools)).
\15\ FINRA Rule 2210(d)(1)(F)(iii) (stating that a member firm
may communicate a price target contained in a research report on
debt or equity securities, provided that the price target has a
reasonable basis, the report discloses the valuation methods used to
determine the price target, and the price target is accompanied by
disclosure concerning the risks that may impede achievement of the
price target).
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B. The Proposed Rule Change
The proposed rule change would adopt a fourth exception to FINRA
Rule 2210(d)(1)(F) to permit the communication of projected performance
or targeted returns in certain narrowly defined circumstances.
Specifically, proposed FINRA Rule 2210(d)(1)(F)(iv) would exclude from
Rule 2210(d)(1)(F)'s general prohibition a member firm's communication
that projects the performance or provides a targeted return with
respect to a security, a securities portfolio, or an asset allocation
or other investment strategy, provided that the member firm: (1) adopts
and implements written policies and procedures reasonably designed to
ensure that the communication is relevant to the likely financial
situation and investment objectives of the intended audience of the
communication; \16\ (2) has a reasonable basis for the criteria used
and assumptions made in calculating the projected performance or
targeted return, and retains written records supporting the basis for
such criteria and assumptions; \17\ and (3) provides sufficient
information to enable the intended audience to understand: (i) the
criteria used and assumptions made in calculating the projected
performance or targeted return, including whether the projected
performance or targeted return is net of anticipated fees and expenses;
and (ii) the risks and limitations of using the projected performance
or targeted return in making investment decisions, including reasons
why the projected performance or targeted return might differ from
actual performance.\18\
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\16\ Proposed FINRA Rule 2210(d)(1)(F)(iv)(a).
\17\ Proposed FINRA Rule 2210(d)(1)(F)(iv)(b).
\18\ Proposed FINRA Rule 2210(d)(1)(F)(iv)(c).
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[[Page 30751]]
III. Proceedings To Determine Whether To Approve or Disapprove File No.
SR-FINRA-2026-004 and Grounds for Disapproval Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the proposed rule
change should be approved or disapproved.\19\ Institution of
proceedings is appropriate at this time in view of the legal and policy
issues raised by the proposed rule change. Institution of proceedings
does not indicate that the Commission has reached any conclusions with
respect to the proposed rule change.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act, the Commission
is providing notice of the grounds for disapproval under
consideration.\20\ The Commission is instituting proceedings to allow
for additional analysis and input concerning whether the proposed rule
change is consistent with the Exchange Act and the rules thereunder.
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\20\ Id.
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IV. Request for Written Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposed rule change. In particular, the Commission invites
the written views of interested persons concerning whether the proposed
rule change is consistent with the Exchange Act and the rules
thereunder.
Although there do not appear to be any issues relevant to approval
or disapproval that would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 19b-4, any request for an opportunity to make an oral
presentation.\21\
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\21\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Acts Amendments of 1975, Public Law 94-29, 89 Stat. 97
(1975), grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Acts Amendments of
1975, Report of the Senate Committee on Banking, Housing and Urban
Affairs to Accompany S. 249, S. Rep. No. 75, 94th Cong., 1st Sess.
30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the proposed rule change should be approved
or disapproved by June 16, 2026. Any person who wishes to file a
rebuttal to any other person's submission must file that rebuttal by
June 30, 2026.
Comments may be submitted by any of the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#3644435a531b55595b5b535842457645535518515940"><span class="__cf_email__" data-cfemail="7604031a135b15191b1b131802053605131558111900">[email protected]</span></a>. Please include
file number SR-FINRA-2026-004 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-FINRA-2026-004. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of such filing will be available for inspection and
copying at the principal office of FINRA. Do not include personal
identifiable information in submissions; you should submit only
information that you wish to make available publicly. We may redact in
part or withhold entirely from publication submitted material that is
obscene or subject to copyright protection. All submissions should
refer to file number SR-FINRA-2026-004 and should be submitted on or
before June 16, 2026. If comments are received, any rebuttal comments
should be submitted on or before June 30, 2026.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\22\
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\22\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2026-10365 Filed 5-22-26; 8:45 am]
BILLING CODE 8011-01-P
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