Suitability

When your broker recommends that you buy or sell a particular security, your broker must have a reasonable basis for believing that the recommendation is suitable for you. In making this assessment, your broker must consider your risk tolerance, other security holdings, financial situation (income and net worth), financial needs, and investment objectives.

The major securities industry self-regulatory organizations have suitability rules. You'll find FINRA's suitability rule – Rule 2310 – and links to other FINRA materials concerning suitability in the FINRA Manual on FINRA’s website. Similarly, you can find the New York Stock Exchange's suitability rule – Rule 405 – among the NYSE incorporated rules on the FINRA website.

If you believe your broker made unsuitable recommendations or engaged in another sales practice abuse, please send us your complaint using our online complaint form.

http://www.sec.gov/answers/suitability.htm