FINRA Permits Performance Projections and Targeted Returns in Certain Broker-Dealer Communications

On October 15, 2026, the Securities and Exchange Commission (“SEC”) approved amendments to FINRA Rule 2210 that permit broker-dealers, subject to specified conditions, to include projected performance and targeted returns in certain investor communications. The amendments represent a notable change from FINRA’s long-standing restrictions on communications containing projected performance and targeted returns. The new exception allows broker-dealers to communicate projected performance or targeted returns relating to individual securities, securities portfolios, asset allocation models, and other investment strategies, provided specified conditions are satisfied.

Conditions for Use

Broker-dealers relying on the exception must implement policies and procedures reasonably designed to ensure that the communication is relevant to the likely financial circumstances and investment objectives of the intended audience. FINRA stated that firms should limit these communications to investors whom they reasonably believe have access to resources to independently analyze projected performance and targeted return information and the financial expertise to understand the risks and limitations of these types of presentations. FINRA declined to establish categorical safe harbors for particular investor types, instead emphasizing a facts-and-circumstances approach under firms’ policies and procedures. As a result, the exception is generally not intended for broad retail audiences or mass-market retail advertising.

In addition, firms must provide sufficient disclosure regarding:

• The criteria used and assumptions made in calculating the projected performance or targeted return; and
• The risks and limitations of using the projection or return in making investment decisions.

Broker-dealers must also maintain records concerning the source of any projected performance or targeted return information used in a communication.  Although FINRA removed a proposed “reasonable basis” requirement, projected performance and targeted return communications remain subject to Rule 2210’s requirement that communications be fair, balanced, and not misleading.

Implications for Placement Agents

The amendments may be particularly significant for private fund sponsors and registered investment advisers that engage FINRA-member placement agents in connection with fundraising activities. Rule 206(4)-1 under the Investment Advisers Act of 1940, as amended (the “SEC Marketing Rule”), permits registered investment advisers to present hypothetical performance, including projected performance and targeted returns, subject to specified conditions. Broker-dealer placement agents, however, have historically been subject to FINRA’s prohibition on projected performance communications, resulting in different communication standards for investment advisers and placement agents discussing the same investment opportunity.

The amendments narrow, but do not eliminate, differences between the communications frameworks applicable to broker-dealers and registered investment advisers by creating an option for placement agents to be able to communicate projected performance and targeted return information in connection with private fund offerings, subject to the conditions of Rule 2210 and applicable supervisory requirements.

Considerations for Fund Sponsors

FINRA also noted that compliance with the SEC Marketing Rule does not automatically establish compliance with Rule 2210.  Therefore, private fund sponsors should not assume that materials prepared in compliance with the SEC Marketing Rule will automatically satisfy FINRA requirements. Broker-dealer placement agents remain responsible for independently evaluating:

• Whether the communication is relevant to the likely financial circumstances and investment objectives of the intended audience;
• Whether disclosures regarding criteria, assumptions, risks, and limitations are sufficient;
• Whether communications are fair, balanced and not misleading; and
• Whether adequate records are maintained to support the projections and targeted returns.

Sponsors may therefore benefit from working closely with placement agents when developing fundraising presentations, diligence materials, and return projections to ensure compliance with regulatory requirements.

Conclusion

The amendments provide broker-dealers, including placement agents, with greater flexibility to communicate projected performance and targeted returns to certain investors, subject to robust disclosure, supervisory, and recordkeeping requirements. For private fund sponsors, the changes may facilitate discussions regarding targeted returns, portfolio-level projections, and other forward-looking analyses requested by institutional investors. Firms seeking to rely on the new exception should review their supervisory procedures, disclosure practices, and recordkeeping processes before incorporating projected performance or targeted return information into investor-facing materials.

The amendments are not yet effective. FINRA will announce the effective date in a Regulatory Notice to be published no later than 60 days after SEC approval. The effective date will be no later than 180 days after publication of the notice.