FINRA Rule 2111

Known as the Suitability Rule, obligates firms and representatives to evaluate whether a recommendation is appropriate for a particular customer by considering factors such as the customer’s investment profile, including age, financial situation, risk tolerance, investment objectives, and experience.

It includes three key components: reasonable-basis suitability (understanding the product or strategy), customer-specific suitability (matching it to the individual client), and quantitative suitability (avoiding excessive or unsuitable trading). The rule applies to both explicit recommendations and implicit strategies, including hold recommendations.