FINRA just filed SR-FINRA-2026-004 proposing to amend Rule 2210 — the communications with the public rule — to permit members to project performance or provide targeted returns in their communications. That's a meaningful change. For years, the practical answer to "can we show projected returns?" has been "no, unless you want to explain it to an examiner." This proposal would change that answer to "yes, but."
What the Proposal Actually Says
The proposed amendment to FINRA Rule 2210 would allow members to include performance projections or targeted returns for securities, portfolios, or investment strategies in their communications. But this isn't a free pass. The proposal includes specific conditions designed to ensure these projections are "carefully derived from a sound basis."
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That phrase — "sound basis" — is doing a lot of work here. FINRA isn't opening the door to hypothetical returns pulled from thin air. The conditions will likely require:
- Reasonable assumptions clearly disclosed
- Documentation supporting the methodology
- Appropriate risk disclosures alongside projections
- Clear labeling that projections are not guarantees
The exact conditions will matter enormously. Until we see the final rule text and any supplementary guidance, compliance teams should treat this as directional — not operational.
Why This Matters Operationally
If you've worked in compliance for any length of time, you've had the conversation with sales or marketing about why they can't show clients that Monte Carlo simulation or projected portfolio growth chart. The answer has always been some version of "Rule 2210 doesn't allow it, and we're not going to be the test case."
This proposal could change that dynamic. But it also means your review procedures will need to get more sophisticated, not less. Allowing projections doesn't mean allowing any projection. Your supervisory system will need to distinguish between projections that meet the "sound basis" standard and those that don't.
That's not a burden you should underestimate. Examiners will want to see:
- How you determined a projection met the conditions
- What documentation you required
- How you trained your supervisors to review these communications
- What you rejected and why
What to Do Now
Don't rewrite your procedures yet. The proposal has been filed with the SEC, but it's not final. The Commission will review it, and there may be comment periods and revisions before anything becomes effective.
What you should do now:
- Track the proposal through the SEC review process
- Brief your marketing and sales teams that a change may be coming — but isn't here yet
- Start thinking about what your review framework would need to look like
- Document any current practices around projections so you have a baseline
When this becomes final — if it becomes final — you'll need to move quickly. Getting ahead of the framework now gives you a head start.
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Key Takeaways
Can we start using performance projections now?
No. SR-FINRA-2026-004 is a proposal filed with the SEC, not a final rule. Until the SEC approves it and an effective date is set, existing Rule 2210 restrictions remain in place.
What does 'sound basis' mean for projections?
The proposal requires projections to be "carefully derived from a sound basis." Expect this to mean documented methodology, reasonable assumptions, and appropriate disclosures. Final guidance will clarify the specific requirements.
Will this apply to retail communications only?
Rule 2210 covers all communications with the public, including retail, correspondence, and institutional communications. The conditions may vary by communication type, but the amendment appears to apply broadly across categories.
The content in this blog is for informational purposes only and does not constitute legal advice, regulatory guidance, or an offer to sell or solicit securities. GiGCXOs is not a law firm. Compliance program requirements vary based on business model, customer base, and regulatory classification.