Take Two: FINRA Revisits Proposal to Align Rule 2210 with the SEC Marketing Rule

On February 10, 2026, FINRA re-proposed amendments to Rule 2210 to permit performance targets and projections in broker-dealer communications, subject to certain conditions. If adopted, the proposed amendments would be a welcome change for broker-dealers and private fund managers, as FINRA’s current rule prohibits performance projections in communications with the public. While the proposed amendments are designed to align FINRA’s treatment of performance targets and projections with the SEC Marketing Rule,¹ FINRA’s proposal still conflicts with the SEC Marketing Rule in some important respects, continuing to allow for inconsistent practices across the private funds industry.

Background

FINRA Rule 2210(1)(F) currently prohibits broker-dealers from predicting or projecting performance in communications with the public, subject to very limited exceptions. As registered investment advisers have the ability to share this type of performance information, Rule 2210’s existing prohibition on projections has led to investor confusion and inconsistent market practice.

This isn’t the first time FINRA has proposed permitting performance targets and projections in promotional communications. As we previously covered, and formally commented on, FINRA proposed a more limited version of the current proposal in December 2023 that would have permitted broker-dealers to provide projected performance and targeted returns to institutional investors and qualified purchasers, provided that certain conditions were satisfied.² That proposal, however, never went into effect.³

Presently, fund managers can include performance projections and other forms of hypothetical performance in private fund marketing materials, but this information must be suppressed when the materials are distributed by a broker-dealer. FINRA’s latest proposal broadens the universe of potentially acceptable recipients for this information.

The Proposed Amendments

If adopted, the proposed amendments would create a new, narrowly-tailored exception to the general prohibition on performance projections in Rule 2210, provided that the broker-dealer:

1. 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 of the communication;
2. Has a reasonable basis for the criteria used and assumptions made in calculating the projected performance or targeted return, and retains written records supporting the basis for such criteria and assumptions; and
3. Provides sufficient information to enable the intended audience to understand:
   1. The criteria used and assumptions made in calculating the projected performance or targeted return, including whether the projected performance or targeted return is net of anticipated fees and expenses; and
   2. The risks and limitations of using the projected performance or targeted return in making investment decisions, including reasons why the projected performance or targeted return might differ from actual performance.

Like the SEC Marketing Rule, the proposed amendments do not prescribe the ways in which a broker-dealer may determine that the communication is relevant to the likely financial situation and investment objectives of the intended audience. FINRA did, however, clarify in the release accompanying the proposal that a communication that contains performance or targeted returns should only be distributed where the broker-dealer reasonably believes the recipients have the financial expertise and resources to understand the risks and limitations of performance projections and targeted returns. This means that performance and targeted returns may not be included in communications directed to a mass audience or intended for general circulation among retail investors.

Compliance with this aspect of the proposed conditions will be familiar to private fund managers that already comply with the Marketing Rule. 

Contrast Between FINRA Rule 2210 and the SEC Marketing Rule

While the new Rule 2210 proposal is more closely aligned with the SEC Marketing Rule, some important differences remain. Most critically, the proposed rule is narrower than the Marketing Rule in that it applies only to projected performance and targeted returns. By contrast, the SEC Marketing Rule addresses “hypothetical performance,” which also includes performance derived from model portfolios and performance that is backtested by the application of a strategy to data from periods prior to the strategy’s actual implementation. FINRA clearly stated in the release accompanying the proposal that these types of hypothetical performance are not within the scope of the proposed amendments, and so would not be permissible in broker-dealer communications. Certain other types of performance that are commonly used in private fund marketing materials are not addressed at all. For example, private fund sponsors often prepare “track records” from the performance of a subset of actual investments from their prior funds to promote a new strategy (e.g., the performance of all healthcare investments made in multi-sector funds). The treatment of these performance streams, which are built from actual transactions but typically treated as hypothetical performance under the SEC Marketing Rule, is unclear.

Commenting on the Proposed Amendments

Interested parties can submit comments to the SEC. While the SEC has not announced the comment deadline as of the date of this alert, we expect comments to be due by mid-March 2026 (21 days after publication in the Federal Register).