8.2.3.1. FINRA Suitability Obligations
A broker-dealer must believe on reasonable grounds that its recommended transactions or strategies are suitable for an individual customer. FINRA recognizes three suitability obligations:
1. Reasonable-basis obligation. A broker-dealer and registered rep must understand the complexity and risks of a security or investment strategy and consciously determine whether it’s suitable for at least some investors. If a firm or its brokers and dealers do not understand the risks and mechanics of
