Following proposals first set out in February, restrictions around communicating targeted returns are being lifted for broker-dealers under FINRA Rule 2210.
TL;DR: align content approvals with your distribution partners.
The ways in which broker-dealers can present projections of investment performance is about to change.
This comes as a result of the SEC approving amendments to FINRA Rule 2210 on 15 October 2026, which largely barred this practice (with a few narrow exceptions). Now, certain communications that meet a set of conditions can include targeted returns.
Practitioners in private markets will find this a welcome change. Particularly any managers across private equity, private credit and other alternative vehicles that tend to talk in target IRRs and target multiples.
Broker-dealers faced a far stricter SEC Marketing Rule regime than RIAs, despite distributing the same products. This meant that the same fund would be presented differently across an adviser’s deck and a placement agent’s; the very issue the amendment looks to change.
With permission granted, the ‘required conditions’ act as the next stage for a firm’s focus:
- Policies and procedures must ensure projections are well-suited to the financial situation and objectives of the intended audience (with FINRA expecting recipients to be institutional rather than a broader retail audience).
- Communications have to explain assumptions behind the figures, and risks and limitations.
- The change does not extend to backtested, model, related or extracted performance.
- The proposed recordkeeping requirement is consistent with the other types of records required to be maintained under Rule 2210, and that members should retain records concerning the source of any performance projections used in communications.
- Following commenters’ recommendation to remove, replace, refine, or explain ‘reasonable basis’ language, FINRA proposed to remove it, citing it as “unnecessary” with existing content standards emitting any exaggerated, unwarranted or misleading forecasts.
So, what does this mean for fund marketers?
Compliance with the Marking Rule does not equal compliance with FINRA Rule 2210, which is hugely important when auditing target-return language.
Pitch decks, DDQs and placement-agent materials using target IRRs and multiple should be mapped against the Marketing Rule and recent amendments, potentially not satisfying both in one fell sweep. Even for records where the rule is lighter, it is good practice to build a file that supports each projection’s inputs (the first thing an examiner may ask for!).
Broker-dealer partnerships should also be more tight-knit for materials to be consistent. Ask how they plan to use projections, and who owns assumptions, risk language and approvals. Diarising the regulator notice helps determine when distribution partners can start implementing the change going forward.
Forward planning should also include segmenting audiences accordingly. Distribution lists and portal gates should separate retail and institutional recipients when projections are in play.
FINRA is expected to announce an effective data in a later Regulatory Notice; something all affected firms should keep an eye on.
Sources
K&L Gates, “United States: FINRA Opens the Door to Projected Returns”
Advisor Hub, “Brokers May Tout Performance Projections, Same as RIAs, SEC Says”
SEC (primary filing), SR-FINRA-2026-004
