For decades, Rule 2210 has restricted FINRA member broker-dealers from including projected performance or targeted returns in communications with the public, even as registered investment advisers (“RIAs”), issuers, and unregistered intermediaries were permitted to present comparable information under other frameworks, most notably Rule 206(4)-1 under the Investment Advisers Act of 1940 (the “Marketing Rule”). The Amendments narrow that gap. They are likely to be most consequential for (i) broker-dealers that distribute private funds and other alternative investments, (ii) private fund sponsors that use placement agents, and (iii) dual registrants that have had to maintain divergent marketing standards across their adviser and broker-dealer channels.

The new exception is conditional and members that wish to rely on it must adopt and implement written policies and procedures governing the intended audience, provide specified disclosures, maintain records concerning the source of the projection or target, and continue to satisfy Rule 2210’s general content standards. Importantly, FINRA has stated that the exception generally will not support communications directed to a mass audience or intended for general circulation.

The Amendments are the culmination of a long-running effort. FINRA first proposed relaxing the prohibition in 2017, when Regulatory Notice 17-06 requested comment on a proposal to permit projections of performance in institutional communications and in communications to qualified purchasers. That proposal was never filed with the SEC, and the prohibition remained in place as the Marketing Rule took effect for investment advisers in 2022, widening the regulatory gap between the two channels. FINRA filed the current proposal in February 2026 and, after the SEC instituted proceedings and FINRA responded to two rounds of public comment, narrowed it through Partial Amendment No. 1 before the SEC approved it in October 2026. The effective date of the Amendments is still pending - FINRA will announce the effective date in a Regulatory Notice to be published no later than 60 days following SEC approval, and the effective date will be no later than 180 days after publication of such notice. The SEC noted that the record reflects years of FINRA engagement with its members, advisory committees, and the public.

Importantly, no effective date for the Amendments has been announced, so members should continue to abide by FINRA Rule 2210’s unamended requirements until such date.

Background: Rule 2210 and the Path to Approval

The Existing Communications Framework

FINRA Rule 2210 governs member communications with the public and divides them into three categories: (i) correspondence; (ii) retail communications (written communications distributed or made available to more than 25 retail investors within any 30 calendar-day period); and (iii) institutional communications (written communications distributed or made available only to institutional investors).

Rule 2210’s general content standards require that communications be based on principles of fair dealing and good faith, be fair and balanced, and provide a sound basis for evaluating the facts regarding any security or service discussed.

Rule 2210(d)(1)(F) has separately prohibited communications that predict or project performance, imply that past performance will recur, or make any exaggerated or unwarranted claim, opinion, or forecast. FINRA has long interpreted that prohibition to capture both projections of performance and targeted returns. Before the Amendments, the rule contained three narrow exceptions: certain hypothetical illustrations of mathematical principles; certain investment analysis tools and written reports produced by them; and price targets contained in debt or equity research reports meeting specified conditions.

Regulatory Rationale

FINRA noted that sophisticated investors routinely request projections and targeted returns, and that broker-dealers alone were foreclosed from providing them. As RIAs, issuers, and unregistered intermediaries could present similar information, the asymmetry risked incentivizing issuers to avoid broker-dealer distribution channels and contributed to investor confusion.

Added Conditional Exception for Target Returns and Projections of Performance

A New Fourth Exception

Amended Rule 2210(d)(1)(F)(iv) permits a broker-dealer to project the performance of, or provide a targeted return with respect to, a security, a securities portfolio, or an asset allocation or other investment strategy, provided that the member: (i) 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; (ii) provides sufficient information to enable the intended audience to understand the criteria used and assumptions made in calculating the projected performance or targeted return, as well as the risks and limitations of using it in making investment decisions; and (iii) maintains records that include information concerning the source of the projection or targeted return. Each condition is discussed below.

FINRA characterized “projections of performance” as estimates of the future performance of an investment or investment strategy, often based on historical data and assumptions and commonly established through mathematical modeling, and “targeted returns” as aspirational performance goals for an investment or investment strategy.²

Written Policies and Procedures Concerning the Intended Audience

A member that includes projected performance or targeted returns in communications with the public must adopt and implement 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. FINRA expects such communications to be provided only to investors the member reasonably believes have the financial resources to analyze the information independently and the financial expertise to understand its risks and limitations. FINRA stated that the rule generally would not permit this content in communications directed to a mass audience or intended for general circulation, including a general retail investor audience.

Notably, FINRA declined to establish a bright-line category of eligible investors or a safe harbor. The condition is principles-based, giving members flexibility to calibrate eligibility to their own investor base, business model, and the facts and circumstances of each communication, but also leaving members to defend their line-drawing in examinations and enforcement.

Disclosure of Criteria, Assumptions, Risks, and Limitations

A member relying on the exception must provide sufficient information to enable the intended audience to understand (i) the criteria used and assumptions made in calculating the projected performance or targeted return, and (ii) the risks and limitations of using the projection or target in making investment decisions.

Partial Amendment No. 1 removed from the final rule text express requirements to disclose whether the projected performance or targeted return is net of anticipated fees and expenses and to disclose the reasons why the figure might differ from actual performance. Members should not read those deletions as a safe harbor, as FINRA stated that Rule 2210’s general content standards may still require such disclosures depending on the facts and circumstances, and the Approval Order states that a member would be expected to disclose these items, tailored to the communication and its intended audience.

Recordkeeping and Source Documentation

Partial Amendment No. 1 amended Rule 2210(b)(4)(A)(iv) to require that a member’s records include information concerning the source of any projection of performance or targeted return used in a communication. This sits alongside existing Rule 2210(b)(4) obligations to retain retail and institutional communications for the period required by Exchange Act Rule 17a-4(b), in a compliant format and medium, together with the dates of first and last use, principal approval information, information identifying the preparer or distributor where applicable, and source information for tables, charts, graphs, and other illustrations.

No Express Reasonable-Basis Requirement, but Substantiation Is Still Expected

FINRA’s original filing contained an express reasonable-basis requirement and a related recordkeeping obligation. Partial Amendment No. 1 removed both. FINRA stated that: “(1) the proposed recordkeeping requirement—coupled with the existing requirement that member communications provide a sound basis for evaluating the facts in regard to any particular security or type of security—would require members to substantiate the basis for such performance presentations in order to demonstrate compliance with the content standards; and (2) in most cases, members would be unable to demonstrate compliance with the proposed rule change and the general content standards without records to support the basis for the criteria used and assumptions made in calculating a projection of performance or targeted return.”

Comparison of the Marketing Rule, Current Rule 2210, and Amended Rule 2210

Scope and Applicability

Member firms generally. The exception is available to all FINRA member broker-dealers. It is not limited to a particular product class, and it applies to projections and targets concerning individual securities, securities portfolios, and asset allocation and other investment strategies.

Interaction with Regulation Best Interest. Where projected performance or a targeted return is communicated to a retail customer in connection with a recommendation of a securities transaction or investment strategy, Regulation Best Interest continues to apply.

Private funds, placement agents, and dual registrants. The Amendments are expected to most impact broker-dealers marketing private funds and other alternative products, sponsors that distribute through placement agents, and dual registrants that previously had to remove projections and targets from broker-dealer channel materials that were permissible on the adviser side.

What remains outside the exception. The exception reaches projections of performance and targeted returns only, which are a subset of the Marketing Rule’s hypothetical performance categories. It does not extend to the other hypothetical performance categories, such as model performance and backtested performance—nor to related or extracted performance. FINRA declined to expand the rule to those categories at this time while noting that future amendments or guidance remain possible. Alignment with the Marketing Rule is therefore closer, but still partial, and dual registrants should not assume a single unified marketing standard.

Compliance Considerations

Members that intend to rely on the exception may consider the following steps:

• Update written supervisory procedures and review workflows. Consider amending WSPs to address the new exception, principal pre-use review and approval, distribution controls (including controls against forwarding to retail investors), and escalation of non-conforming materials. Develop and document criteria for determining which investors have the resources and financial expertise contemplated by the rule. Because FINRA declined to provide a safe harbor, the rationale for the firm’s criteria should be documented, approved, and periodically revisited.
• Calibrate disclosure templates. Develop templates for disclosure language covering criteria and assumptions and risks and limitations, to serve as a foundation from which to build the product-specific disclosures of each communication.
• Consider building file of substantiation back-up. For each projection or target, maintain documentation of the underlying criteria, assumptions, methodology, and source, sufficient to satisfy the amended Rule 2210(b)(4)(A)(iv) recordkeeping requirement and to substantiate reasonableness on examination.
• Train registered representatives and principals. Training should emphasize that the exception is conditional, that oral and written communications remain subject to the general content standards, and that projections may not be used as implicit guarantees.
• Coordinate with Regulation Best Interest and private placement review. Where projections accompany recommendations to retail customers, integrate the analysis with Regulation Best Interest care and disclosure obligations and with existing FINRA Rule 5122 and 5123 private placement processes.
• Preserve records in compliant form. Confirm that retention systems capture the new source information along with the communication itself, dates of first and last use, and approval records.

Conclusion

The Amendments mark a meaningful shift in FINRA’s long-standing approach to forward-looking communications, giving broker-dealers a conditional path to share projected performance and targeted returns with sophisticated investors on a more level footing with investment advisers and issuers, provided firms build the policies, disclosures, and recordkeeping the new exception requires. For questions regarding the Amendments or assistance in updating marketing and supervisory procedures, please contact any member of the King & Spalding team.