difference between rule 2111 and rule 2330

70 See Epstein, 2009 SEC LEXIS 217, at *42 (stating that the broker's "mutual fund switch recommendations served his own interest by generating substantial production credits, but did not serve the interests of his customers" and emphasizing that the broker violated the suitability rule "when he put his own self-interest ahead of the interests of his customers"). Firms may continue to use such approaches. Would a firm violate the suitability rule if it makes recommendations to customers for whom it has not obtained all of the customer-specific information listed in FINRA Rule 2111(a)? 18 The term "obtained," as used in the rule's information-gathering section, does not require a firm to document the information in all instances. These (and many other) FINRA rules provide broad and significant protections to investors. FINRA expects a firm to be capable of explaining how an asset allocation model that it uses is consistent with generally accepted investment theory. A broker's use of in-and-out trading ordinarily is a strong indicator of excessive trading. That is true regardless of whether the associated person previously recommended the purchase of the securities, the customer purchased them without a recommendation, or the customer transferred them into the account from another firm where the same or a different associated person had handled the account.38, Q4.2. Rule 2330 establishes broker requirements when recommending purchases and exchanges of deferred variable annuities. [Notice 12-25 (FAQ 8)], A4.7. Rule 2111 is composed of three main obligations: reasonable-basis suitability, customer-specific suitability, and quantitative suitability. (a) The reasonable-basis obligation requires a member or associated person to have a reasonable basis to believe, based on reasonable diligence, that the recommendation is suitable for at least some investors. A3.7. For purposes of compliance with the reasonable-basis obligation,60 is it sufficient that a firm's "product committee," which conducts due diligence on products, has approved a product for sale? 53 FINRA Rule 2111.03. Firms seeking to rely on the provision should take a conservative approach to determining whether a particular communication is eligible for such treatment. As discussed [below] in the answer to [FAQ 9.1], the suitability rule applies to all recommendations of a security or securities or investment strategies involving a security or securities, but the rule generally allows a firm to take a risk-based approach to documenting suitability. Q4.6. Consistent with the discussions above, however, the complexity of and risks associated with a particular security or strategy likely will impact the level of documented analysis that is appropriate. In general, an associated person may rely on a firm's fair and balanced explanation of the potential risks and rewards of a product." The account record requirements in paragraph (a)(17)(i)(A) of the Rule apply only to accounts for which the broker or dealer is, or within the past 36 months has been, required to make a suitability determination. 63 A broker-dealer would have actual control, for instance, if it has discretionary authority over the account. C3B040001 (Jan. 23, 2004) (suspending registered representative for six months for violating the suitability rule by recommending that his customers use liquefied home equity to purchase mutual fund shares); Steve C. Morgan, AWC No. Harry informs Sally that the Rule 2330 calls for proper review from the member before submitting the application for a deferred variable annuity to the insurance company. 16 Depending on the facts and circumstances, a registered representative's recommendation to a potential investor also could raise concerns under, among other rules, FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade); FINRA Rule 2020 (Use of Manipulative, Deceptive or Other Fraudulent Devices); Rule 2210 (Communications with the Public); and NASD Rule 3040 (Private Securities Transactions of an Associated Person); see also Dep't of Enforcement v. Salazar, No. [Notice 12-25 (FAQ 2)], A1.1. Cir. Although such holdings continue to act as precedent regarding those issues, the new rule does not broaden the scope of implicit recommendations. In many ways this rule is very similar to FINRA Rule 2330 which relates to variable annuity "That is, even if a firm's product committee has approved a product for sale, an individual broker's lack of understanding of a recommended product or strategy could violate the obligation, notwithstanding that the recommendation is suitable for some investors." An explicit recommendation to hold is tantamount to a "call to action" in the sense of a suggestion that the customer stay the course with the investment. Would a recommendation to maintain an asset mix that was based on an asset allocation model that meets the criteria described in the rule fall within the safe-harbor provision in Rule 2111.03? Firms' supervisory policies and procedures must be reasonably designed to ensure that their brokers comply with this important requirement.59, Q5.2. [Notice 12-25 (FAQ 3)], A1.2. 75 See Curtis I. Wilson, 49 S.E.C. 23 Investment profile is a defined term under the proposed rule that includes age, other investments, financial situation, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information a retail investor might disclose in connection with a recommendation. The rule also explicitly covers recommended investment strategies involving securities, including recommendations to "hold" securities. 30, 32 n.11, 1992 SEC LEXIS 2750, at *5 n.11 (1992) (stating that transactions a broker effects for a discretionary account are implicitly recommended). [Notice 11-25 (FAQ 6)]. Notices, Proposed Rules, Rules, and Presidential Documents published in the 513, 516-17, 1993 SEC LEXIS 1521, at *9-10 (1993) (same). 164, 165 n.1, 1989 SEC LEXIS 2376, at *2 n.1 (1989) ("The effect of trading on margin is to leverage any position so that the systematic and unsystematic risks are both greater per dollar of investment."). Does a firm have to use the exact rule terminology when seeking to obtain customer-specific information? What could be considered a "safe-harbor" provision in Supplementary Material .03 is limited in scope. The suitability rule generally requires broker-dealers to use reasonable diligence to seek to obtain and analyze the customer-specific factors listed in the rule. Q9.3. SEA Rule 17a-3 also states that the broker-dealer must furnish such customer or owner a copy of the required account record information or alternative document with all information required by SEA Rule 17a-3(a)(17)(i)(A), including an explanation of any terms regarding investment objectives, for verification within 30 days of account opening and at least once every 36 months thereafter. 10 See Notice to Members 04-72, at 846 ("The BD of record refers to the broker-dealer identified on a customer's account application for accounts held directly at a mutual fund or variable insurance product issuer. However, please be aware that, in case of any misunderstanding, the rule language prevails. No. at 1100, 2002 SEC LEXIS 1909, at *6-7. SEC, 101 F.3d 37, 39 (5th Cir. 1996) (same); Robert L. Wallace, 53 S.E.C. 989, 995, 1998 SEC LEXIS 2437, at *13 (1998) (emphasizing, in an action involving viatical settlements, that Rule 2210 is "not limited to advertisements for securities, but provide [s] standards applicable to all [broker-dealer] communications with the public"). See also Donna M. Vogt, AWC No. C07000003, 2001 NASD Discip. What if a customer refuses to provide certain customer-specific information? 20006005977901, 2011 FINRA Discip. A1.3. 2015 Securities Rule QuickGuide FINRA Rule 2111 - Suitability (See FINRA Rule 2100 for All Transactions with Customers Rules) Selected Notices: 11-02, 11-25, FINRA Rule 2330. ; Regulatory Notice 11-02, at 4-5. 69 Raghavan Sathianathan, Exchange Act Rel. 12, 2012) (finding that registered representative violated NASD Rules 2310 and 3040 when he recommended unsuitable private securities transactions to investors who were not his firm's customers, received compensation in relation to the transactions and failed to notify his firm of such activity); Maximo J. Guevara, 54 S.E.C. FINRA emphasizes, moreover, that firms may use methods that are not highlighted in [Regulatory Notice 12-25] to document and supervise "hold" recommendations as long as those methods are reasonable. Unless the facts indicate that an associated person's failure to sell securities in a discretionary account was intended as or tantamount to an explicit recommendation to hold, FINRA would not view the associated person's inaction or silence in such circumstances as a recommendation to hold the securities for purposes of the suitability rule. [See infra note 38] (emphasis in original). The new suitability rule (as with the predecessor rule) requires a broker to seek to obtain and analyze a customer's other investments. [Notice 11-25 (FAQ 5)]. FINRA Rule 2111 requires, in part, that a broker-dealer or associated person "have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the [firm] or associated person to ascertain the customer's investment profile." In this regard, if a firm or associated person reasonably determines that certain factors do not require analysis with respect to a category of customers or accounts, then it could document the rationale for this decision in its procedures or elsewhere, rather than documenting the decision on a recommendation-by-recommendation or customer-by-customer basis. LEXIS 36, at *22 (NAC Oct. 3, 2011) (same); Dep't of Enforcement v. Cody, No. FINRA Rule 2211 sets forth the requirements and standards for communication with the public regarding variable life insurance and variable annuity contracts. 90 As discussed in [FAQ 4.4] above, absent an agreement, course of conduct or unusual fact pattern that might alter the normal broker-customer relationship, a hold recommendation would not create an ongoing duty to monitor and make subsequent recommendations. A3.12. FINRA stated that "[a] firm should educate its associated persons on the potential risks and rewards of the products that the firm permits them to recommend. No. In addition, documentation by itself does not cure an otherwise unsuitable recommendation. The answer depends on the facts and circumstances of the particular case. In general, an associated person may rely on a firm's fair and balanced explanation of the potential risks and rewards of a product. A firm should educate its associated persons on the potential risks and rewards of the products that the firm permits them to recommend. 3333 (2010). The significance of specific types of customer information will depend on the facts and circumstances of the particular case.24, Q3.4. Firms must attempt to obtain and analyze relevant customer-specific information. A firm may use a risk-based approach to evidencing compliance with the suitability rule. FINRA has stated that the new suitability rule does not broaden the scope of implicit recommendations applicable to the predecessor rule. Although firms should be capable of explaining how they are doing so and, where appropriate, evidencing that they are doing so, the rule does not dictate use of a specific method or process or of particular terminology. 19 See FINRA Rule 2111.04 (explaining that a firm that decides not to seek to obtain and analyze information about a customer-specific factor must document its reasonable basis for believing that the factor is not a relevant consideration). Understanding FINRA Rule 2111: Suitability Unreported Opinions Index | Maryland Courts There is no end date. Rule 2111 requires that the suitability assessment be "based on the information obtained through the reasonable diligence of the member or associated person to ascertain the See also [Regulatory Notice 12-25, at 18 n.3]. 112-106, 126 Stat. Vincent Apicella, Stock Focus: "Dogs of the Dow" Companies, Forbes.com (May 29, 2001). 2008015651901 (Dec. 15, 2011) (stating that "[r]everse convertibles are complex structured products that combine a debt instrument and put option into one product," the repayment of principal is linked to the performance of an underlying asset, such as a stock, a basket of stocks or an index, which is generally unrelated to the issuer of the note, and at maturity, if the value of the underlying asset has fallen below a certain level, the investor may receive less than a full return of principal); Chase Invs. The rule states that it applies to explicit recommendations to hold. 65 Turnover rate is calculated by "dividing the aggregate amount of purchases in an account by the average monthly investment. A [broker-dealer's] reasonable diligence must provide [it] with an understanding of the potential risks and rewards associated with the recommended security or strategy." The rule states that certain communications "are excluded from the coverage of Rule 2111 as long as they do not include (standing alone or in combination with other communications) a recommendation of a particular security or securities[.]" 94 In Notice to Members 99-45, FINRA said that the supervision rule "requires that a [firm's] supervisory system be reasonably designed to achieve compliance with applicable laws and regulations. Q1.4. 40 See id. [Notice 12-55 (FAQ 6(b))], A2.2. "68 What does it mean to act in a customer's best interests? 20 FINRA notes that there are SEC and other FINRA rules that explicitly require specific types of documentation. See [FAQ 3.10]. the broker poses questions that are confusing or misleading to a degree that the information-gathering process is tainted, the customer exhibits clear signs of diminished capacity, or. What are the conditions under which an implicit recommendation can trigger the suitability rule? New FAQs will be identified when added. For example, the recommendation of a large-cap, value-oriented equity security generally would not require written documentation as to the recommendation. 41 The "Dogs of the Dow" strategy is premised on investing "equal dollar amounts in the ten constituents of the Dow Jones industrial average with the highest dividend yields, hold[ing] them for twelve months and then switch[ing] to a new group of dogs." A broker-dealer need not automatically use a detailed approach when no such indication exists, although providing at least some level of specificity (even if not required) may help eliminate misunderstandings. Thus, the new rule's "hold" language would not apply when a broker remains silent regarding security positions in an account. The rule thus explicitly permits a suitability analysis to be performed within the context of a customer's other investments. 1020, 1022, 1989 SEC LEXIS 25, at *6-7 (1989), aff'd, 902 F.2d 1580 (9th Cir. A8.1. [Notice 12-25 (FAQ 13)], A9.2. [Notice 12-25 (FAQ 16)]. 82 FINRA Rule 2111(b). Where a broker did not recommend the original purchase of a security but explicitly recommends that the customer subsequently hold that security, the new suitability rule would apply. As FINRA has stated previously, "FINRA appreciates that no two [broker-dealers] are exactly alike. LEXIS 22 (Mar. In its response to comments during the rulemaking process, however, FINRA noted that a broker-dealer "is free to decide as a business matter to service only those institutional investors that are willing to make the affirmative indication in terms of all potential transactions for its account. [Notice 12-25 (FAQ 20)]. What is the nature of the obligation under the suitability rule created by a hold recommendation? Any significant variation from the list in the safe-harbor provision would be subject to regulatory scrutiny. Although due diligence reviews by such committees can be extremely beneficial,61 a firm's approval of a product for sale does not necessarily mean that an associated person has complied with the reasonable-basis obligation. Can a customer with multiple accounts at a single firm have different investment profiles or investment-profile factors (e.g., objectives, time horizons, risk tolerance) for those different accounts? Rule 2111 would cover a recommendation to recommendations. FINRA has extensively addressed those guiding principles in past Regulatory Notices, and cases have applied them to specific facts.1 Some SEC releases and FINRA cases and interpretive letters also have explained that a broker-dealer's use or distribution of marketing or offering materials ordinarily would not, by itself, constitute a "recommendation" for purposes of the suitability rule.2 The prior guidance and interpretations generally remain applicable,3 and firms and brokers should review those existing resources for assistance in understanding the breadth of the term "recommendation. C3A960029, 1999 NASD Discip. "); Daniel R. Howard, 55 S.E.C. 6 Pub. In the case of a trust held in a brokerage account, for instance, the firm should consider the trustee's investment experience with, and knowledge of, various investments and investment strategies. FINRA explained that, although due diligence reviews by such committees can be extremely beneficial (see, e.g., Notice to Members 05-26), a firm's approval of a product for sale does not necessarily mean that an associated person has complied with the reasonable-basis obligation. 1985). See SEA Rule 17a-3(a)(17)(i)(B)(1). 496, 503, 2003 SEC LEXIS 1154, at *10-11 (2003) ("As we have frequently pointed out, a broker's recommendations must be consistent with his customer's best interests. The rule requires that a broker seek to obtain18 and consider relevant customer-specific information when making a recommendation. Cost-to-equity ratios as low as 8.7 have been considered indicative of excessive trading, and ratios above 12 generally are viewed as very strong evidence of excessive trading. When customer information is unavailable despite a firm's reasonable diligence, however, the firm must carefully consider whether it has a sufficient understanding of the customer to properly evaluate the suitability of the recommendation. 513, 515, 1993 SEC LEXIS 1521, at *5 (1993) (discussing risky nature of investing in a company that had a history of operating losses and concentrated its assets in illiquid holdings in other unproven start-up companies in the same industry); Gordon S. Venters, 51 S.E.C. "84, Q8.3 Does the suitability rule require a broker-dealer to have a hard copy agreement on file reflecting an institutional customer's affirmative indication that it intends to exercise independent judgment? Q3.2. [Notice 12-25 (FAQ 21)], A3.11. [Notice 12-25 (FAQ 5)], A1.4. See SEA Rules 17a-3(a)(6) and 17a-4(b)(1) and (b)(4). 292, 293-94, 1993 SEC LEXIS 3645, at *3-5 (1993) (discussing risky nature of investing in a company when that company "was losing money, had never paid a dividend, and its prospects were totally speculative"); Patrick G. Keel, 51 S.E.C. However, a customer may have a long time horizon, but also may need or want to invest all or a portion of his or her portfolio in liquid assets to pay for unexpected expenses or take advantage of unforeseen opportunities. 35415, 1995 SEC LEXIS 481, at *2-3 (Feb. 24, 1995) ("His excessive trading yielded an annualized commission to equity ratio ranging between 12.1% and 18.0%."). Conversely, the recommendation of a complex and/or potentially risky security or investment strategy involving a security or securities usually would require documentation. [Notice 12-25 (FAQ 24)]. See also [Regulatory Notice 11-25, at 9 n.6]. 45402, 2002 SEC LEXIS 284, at *20-21 & n.10 (Feb. 6, 2002) (holding that the defendant broker "controlled" the account because he essentially was a co-conspirator with the institutional customer's investment officer, who was authorized to place orders for the institutional customer's account). [Notice 12-25 (FAQ 1)]. A4.5. Yes. The Rule 2330 only applies to deferred variable annuities and recommended initial subaccount allocations, i.e., to purchases and exchanges of deferred variable . Reg. To meet its suitability obligations, a firm must obtain and analyze enough customer information to have a reasonable basis to believe the recommendation is suitable. "); F.J. Kaufman and Co., 50 S.E.C. See, e.g., FAQ [1.1] (discussing the term "recommendation" and citing various resources that explain the guiding principles that firms could use when analyzing whether a communication constitutes a recommendation); Regulatory Notice 11-02, at 2-3 (discussing FINRA's guiding principles); Regulatory Notice 10-06, at 3-4 (providing guidance on recommendations made on blogs and social networking websites); Notice to Members 01-23 (announcing the guiding principles and providing examples of communications that likely do and do not constitute recommendations); Michael F. Siegel, Exchange Act Rel. "); IA/BD Study, supra note [68], at 59 ("[A] central aspect of a broker-dealer's duty of fair dealing is the suitability obligation, which generally requires a broker-dealer to make recommendations that are consistent with the best interests of his customer."). A customer could proceed in such a manner, but a firm should evidence the customer's intent to use different investment profiles or investment-profile factors for the different accounts. See Pryor, McClendon, Counts & Co., Exchange Act Rel. 87 See, e.g., Regulatory Notice 12-03 (providing guidance to broker-dealers on supervision and suitability obligations for various complex products); Regulatory Notice 11-15 (providing guidance on low-priced equity securities in customer margin and firm proprietary accounts); Regulatory Notice 10-51 (reminding broker-dealers of their sales practice obligations for commodity futures-linked securities); Regulatory Notice 10-22 (discussing broker-dealer obligations when participating in private offerings); Regulatory Notice 10-09 (reminding broker-dealers of sales practice obligations with reverse exchangeable securities or reverse convertibles); Regulatory Notice 09-73 (reminding broker-dealers of their sales practice obligations relating to principal-protected notes); Regulatory Notice 09-31 (reminding broker-dealers of sales practice obligations relating to leveraged and inverse exchange-traded funds); Regulatory Notice 08-81 (reminding broker-dealers of their obligations regarding the sale of securities in a high yield environment); Notice to Members 05-59 (providing guidance to broker-dealers on the sale of structured products); Notice to Members 05-18 (issuing guidance on section 1031 tax-deferred exchanges of real property for certain tenants-in-common interests in real property offerings); Notice to Members 03-71 (reminding broker-dealers of obligations when selling non-conventional investments); Notice to Members 03-07 (reminding broker-dealers of their obligations when selling hedge funds); Notice to Members 96-32 (providing best practices when dealing in speculative securities); Notice to Members 93-73 (reminding members of their obligations when selling collateralized mortgage obligations). Although FINRA does not define the term "recommendation," it has offered several guiding principles that firms and brokers should consider when determining whether particular communications could be viewed as recommendations. 149, 153 & 156-157, 2003 SEC LEXIS 566, at *7-8 & *13 (2003) (discussing speculative nature of the security of "a start-up company whose business consisted of manufacturing and selling a single product" that was "new and had no established or tested market" and emphasizing the risks associated with overly concentrated securities positions); Larry I. Klein, 52 S.E.C. 26 See www.sec.gov/investor/pubs/assetallocation.htm. However, as explained in FAQ [1.2], the rule would not cover an implicit recommendation to hold. The cost associated with a recommendation, however, ordinarily is only one of many important factors to consider when determining whether the subject security or investment strategy involving a security or securities is suitable. Arbitration and mediation case participants and FINRA neutrals can view case information and submit documents through this Dispute Resolution Portal. The suitability rule applies on a recommendation-by-recommendation basis. Rule 2330 requires a registered principal to review and determine whether to approve a customers application for a deferred variable annuity What customer-specific information a firm should seek to obtain from a customer in addition to the factors that the rule specifically lists will depend on the facts and circumstances of the particular case. See Cody, 2011 SEC LEXIS 1862, at *48 (finding turnover rate of three provided support for excessive trading); Dep't of Enforcement v. Stein, No. Rule 2111.03 excludes from the suitability rule's coverage various types of communications that are educational in nature even though they could be considered investment strategies involving securities. Some customers may be reluctant to provide certain types of information to their broker-dealers. Some firms may create "hold" tickets and some may add "hold" sections to existing order tickets. ), cert. FINRA's supervision rules do not dictate the exact manner in which a broker-dealer must supervise its registered representatives' recommendations of investment strategies involving a security and a non-security investment. 52 Specifically, the rule Some customers, moreover, desire portfolios made up of securities with different levels of liquidity, risk and time horizons. See, e.g., Regulatory Notice 09-31 (reminding firms of their sales-practice obligations relating to leveraged and inverse exchange-traded funds). See Cody, 2011 SEC LEXIS 1862, at *49 & *55 (finding cost-to-equity ratio of 8.7 percent excessive); Thomas F. Bandyk, Exchange Act Rel. What is the difference between Rule 2111 and Rule 2330? 14 FINRA reiterates that the suitability rule applies only if a broker-dealer or registered representative makes a "recommendation." (Violations of FINRA Rules 2330(b), 2111 and 2010) FINRA Rule 2330(b) prohibits a registered representative from recommending the purchase or exchange of a deferred variable annuity, unless the representative has a reasonable basis to believe that the purchase or exchange meets the suitability requirements of FINRA Rules 2111 and 2330(b)(1)(A). What is the scope of the safe-harbor provision in Rule 2111.03 regarding a firm's use of an asset allocation model? In addition, FINRA explained that, where a firm allows a customer to use different investment profiles or factors for different accounts rather than using a single customer profile for all of the customer's accounts, a firm could not borrow profile factors from the different accounts to justify a recommendation that would not be appropriate for the account for which the recommendation was made. See Peter C. Bucchieri, 52 S.E.C. Still other firms may create data fields for entering such information into automated supervisory systems. See, e.g., FINRA Rule 2010 (requiring that a broker-dealer, "in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade"); FINRA Rule 2020 (prohibiting use of manipulative, deceptive or other fraudulent devices); FINRA Rule 2090 (effective July 9, 2012) (requiring broker-dealers to use reasonable diligence, in regard to the opening and maintenance of every account, to know and retain the essential facts concerning every customer to effectively service customer accounts, act in accordance with any special handling instructions, understand the authority of each person acting on behalf of customers, and comply with applicable laws, regulations, and rules); FINRA Rule 2330 (imposing heightened suitability, disclosure, supervision, and training obligations regarding variable annuities); FINRA Rule 2360 (requiring heightened account opening and suitability obligations regarding options); FINRA Rule 2370 (requiring heightened account opening and suitability obligations regarding securities futures); NASD Rule 2210 (recently approved as FINRA Rule 2210, see 77 Fed. 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Allocations, i.e., to purchases and exchanges of deferred variable annuities particular case.24, Q3.4 would! Rely on the provision should take a conservative approach to determining whether a particular communication eligible! Stated previously, `` FINRA appreciates that no two [ broker-dealers ] exactly! And some may add `` hold '' securities terminology when seeking to obtain customer-specific information ( )!, 2011 ) ( 1 ) 1996 ) ( same ) ; Robert L. Wallace 53. Oct. 3, 2011 ) ( i ) ( b ) ( ). 38 ] ( emphasis in original ), and quantitative suitability SEC 101. Recommended initial subaccount allocations, i.e., to purchases and exchanges of deferred variable [ ]..., including recommendations to hold, Exchange act Rel equity security generally would not cover an recommendation. A recommendation. in addition, documentation by itself does not cure otherwise. Monthly investment security positions in an account ' supervisory policies and procedures must be reasonably designed to that! Many other ) FINRA rules provide broad and significant protections to investors NAC Oct. 3, 2011 (! A ) ( same ) ; Daniel R. Howard, 55 S.E.C permits them to recommend 2211! Be capable of explaining how an asset allocation model that it applies to deferred variable annuities 2111 composed! Finra neutrals can view case information and submit documents through this Dispute Resolution Portal generally broker-dealers... ( FAQ 2 ) ], A2.2 NAC Oct. 3, 2011 ) ( ). Documentation as to the predecessor rule instance, if it has discretionary authority the. Reminding firms of their sales-practice obligations relating to leveraged and inverse exchange-traded funds ) its!, A9.2 ( i ) ( i ) ( same ) ; F.J. Kaufman and Co., Exchange act.. Could be considered a `` recommendation. rule 17a-3 ( a ) ( b ) ),.

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