SEC Approves FINRA Rule Letting Broker-Dealers Share Projected and Targeted Returns

The new exception is limited to audiences with the resources and expertise to evaluate the figures, which effectively keeps projections out of mass-market and general retail materials.

October 23, 2026

The Securities and Exchange Commission on October 15 approved a FINRA rule change that will let member broker-dealers include projected performance and targeted returns in communications with the public, lifting a longstanding prohibition on those figures in broker-dealer communications about securities, portfolios, and investment strategies. The approval, issued by the SEC's Division of Trading and Markets under delegated authority, adds a fourth exception to the general ban on predicting or projecting performance in FINRA Rule 2210. FINRA filed the proposal in February and amended it in June after public comment. In July, the SEC approved separate FINRA amendments easing underwriter-affiliate capital investments in non-traded REITs and direct participation programs.

The change addresses a gap FINRA itself described. Registered investment advisers, unregistered intermediaries, and issuers can already provide projections and targeted returns to investors, while FINRA members could not. FINRA said the split could encourage issuers to avoid offering securities through registered broker-dealers and could confuse investors who receive different information about the same investment depending on which financial professional they work with. FINRA has long read Rule 2210 to bar targeted returns as well as projections, and a 2020 regulatory notice applied that prohibition to retail communications about private placements.

Who Can Receive the Numbers

A member that communicates projected performance or a targeted return must adopt and implement written policies and procedures reasonably designed to ensure the communication is relevant to the likely financial situation and investment objectives of its intended audience. FINRA said such material should go only to investors the firm reasonably believes have the resources to analyze it independently and the financial expertise to understand its risks and limitations. It generally cannot appear in communications aimed at a mass audience or at general retail investors, and FINRA said it expects the rule to mainly affect institutional and other sophisticated investors and the firms that serve them.

The rule does not prescribe how firms meet that standard. FINRA said firms could:

• draw on past experience with the types of investors who seek this information;
• sort investors into categories or types; or
• limit distribution to investors who have expressed interest in, or already invested in, particular types of securities.

An investor's interest in high returns would not, by itself, make a projection relevant to that investor. When a member communicates projections alongside a recommendation to a retail customer, Regulation Best Interest also applies.

Disclosures and Records

Members must provide enough information for the intended audience to understand the criteria and assumptions behind a projection or target, along with the risks and limitations of relying on it in making investment decisions. FINRA's original proposal went further, expressly requiring disclosure of whether a figure was net of anticipated fees and expenses and why it might differ from actual results. FINRA dropped both explicit items in its June amendment after industry commenters asked for closer alignment with the SEC's Investment Adviser Marketing Rule. The SEC's order states that a member would still be expected to disclose fee treatment or reasons for potential divergence where needed to meet the rule, though firms may tailor those disclosures to the specific communication and its audience.

The amendment also removed a requirement that members have a reasonable basis for the criteria and assumptions behind a projection and keep written records supporting it. In its place, FINRA added a recordkeeping obligation under Rule 2210(b)(4) covering the source of any projection or targeted return used in a communication. FINRA said it could identify no set of facts in which a projection lacking a reasonable basis would satisfy Rule 2210's existing content standards, which already bar false, exaggerated, unwarranted, promissory, or misleading claims and forecasts. The SEC agreed that an express requirement would duplicate those standards.

FINRA also addressed broker-dealers that distribute projections calculated by third parties, such as fund sponsors or advisers. It said it would not generally expect a member to independently verify every criterion and assumption behind such a projection. It would expect the firm to evaluate the source, assess whether the available information supports the projection, and satisfy itself that the presentation meets Rule 2210's content standards. FINRA declined to say that disclosures complying with the Investment Adviser Marketing Rule would automatically satisfy its own rule, citing differences in phrasing and in the two regulatory regimes.

Backtested and Model Performance Stay Out

Commenters including the Investment Adviser Association, SIFMA, the Managed Funds Association, and the Investment Company Institute asked FINRA to extend the exception to other forms of hypothetical performance permitted under the IA Marketing Rule, such as backtested, model, related, and extracted performance. FINRA declined, calling the rule change incremental and the requests beyond its scope, while leaving the door open to future amendments. The SEC said the narrower approach lets FINRA gain regulatory experience before any expansion is considered.

FINRA also refused requests to treat targeted returns more lightly than projections. North Capital Private Securities argued targeted returns should never have fallen under the prohibition, and the Money Management Institute sought a proportionate framework distinguishing a generalized target from a detailed projection. FINRA said investors may not always understand the difference between the two, so both are subject to the same conditions.

Other requests FINRA turned down included a tiered framework covering educational, distribution, and cash-flow illustrations, proposed by the Alternative & Direct Investment Securities Association (ADISA); safe harbors tied to specific investor categories or standardized methodologies; and a NASAA proposal to allow projections to retail investors only in connection with recommendations covered by Regulation Best Interest. Commenters also sought guidance on matters such as internal rates of return and gross versus net-of-fee presentations. FINRA said it would consider additional guidance as appropriate once the rule was approved.

Support and Opposition

The Institute for Portfolio Alternatives (IPA) and ADISA supported the proposal, as did SIFMA, the Committee of Annuity Insurers, and several fund and adviser trade groups. IPA said investors could use the information to compare alternative investment strategies and that the change would remove an incentive for issuers to distribute private offerings outside the broker-dealer channel.

The Public Investors Advocate Bar Association (PIABA) opposed the rule, saying it would expose investors to a substantial risk of misleading and unbalanced sales presentations and objecting to the removal of the express fee disclosure and reasonable-basis requirements. NASAA said it could not support the proposal without stronger investor protection guardrails written into the rule text.

Obelisk Tech Systems argued that broker-dealer compliance costs would fall disproportionately on capital formation for small issuers. The SEC rejected that argument, noting the rule imposes no mandatory compliance cost on members because relying on the exception is at each firm's discretion, and pointing to an economic impact assessment FINRA included in its proposal.