Recommendations
SERIES 7 | SERIES 24 | FINANCIAL REGULATION COURSES
FINRA Rule 2110 is the series sub-marker for the Recommendations sub-grouping within FINRA Rule 2100's Transactions with Customers subsection — the organizational designation grouping FINRA Rule 2111 (Suitability) and FINRA Rule 2114 (Recommendations to Customers in OTC Equity Securities) as the two rules collectively governing the quality standards applicable to member firms' and associated persons' recommendations to customers.
FINRA Rule 2110 has no operative text of its own. Its FINRA.org page returns no rule text. However, unlike a pure series marker whose only function is organizational, FINRA Rule 2110 carries a regulatory presence beyond its title — it is explicitly referenced in FINRA's examination findings alongside FINRA Rules 2010 and 3110 as a substantive obligation governing member conduct in customer transactions, confirming that the Recommendations sub-grouping it heads carries the collective weight of its child rules as the operative expression of FINRA's recommendations-quality standard.
FINRA Rule 2110 sits within the 2100 Transactions with Customers subsection, immediately following the 2100 series marker and immediately preceding FINRA Rule 2111's Suitability provisions — the first and most substantively important child rule of the 2110 sub-grouping.
The Recommendations Framework in Historical Context
FINRA Rule 2110's Recommendations sub-grouping represents the organizational successor to a longer history of FINRA and NASD recommendations standards. The predecessor framework was primarily housed in NASD Rule 2310 (Recommendations to Customers — Suitability), which required members to have reasonable grounds for believing a recommendation was suitable based on the facts disclosed by the customer regarding their securities holdings and financial situation and needs.
The adoption of FINRA Rule 2111 in 2012 — superseding NASD Rule 2310 — significantly expanded and restructured the recommendations framework, introducing the investment profile concept (encompassing age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and other customer-disclosed information), the three-suitability-obligations structure (reasonable basis suitability, customer-specific suitability, and quantitative suitability), and the institutional investor accommodation. FINRA Rule 2111 was itself subsequently affected by the SEC's adoption of Regulation Best Interest (Reg BI) in June 2019, which established a best interest standard for broker-dealer recommendations to retail customers that is explicitly higher than the suitability standard — and which, under the current framework, applies to retail customer recommendations while FINRA Rule 2111's suitability standard continues to apply to non-retail customers and specific contexts Reg BI does not directly address.
FINRA Rule 2110's sub-grouping thus houses both the suitability framework (FINRA Rule 2111) and the OTC-equity-specific recommendations standard (FINRA Rule 2114) — two rules whose combined scope covers the full range of customer types (retail and institutional) and security types (broadly for Rule 2111; OTC equity specifically for Rule 2114) for which FINRA's recommendations standards apply.
The Regulatory Best Interest Overlay
The adoption of the SEC's Regulation Best Interest (effective June 30, 2020) fundamentally altered the landscape within which FINRA Rule 2110's Recommendations sub-grouping operates. Regulation Best Interest requires broker-dealers, when making a recommendation of any securities transaction or investment strategy involving securities to a retail customer, to act in the best interest of that customer at the time the recommendation is made, without placing the financial or other interest of the broker-dealer or natural person associated with the broker-dealer ahead of the retail customer's interest.
This best interest standard is explicitly higher than the suitability standard FINRA Rule 2111 establishes — it requires broker-dealers to consider the costs of a recommendation and to have a reasonable basis to believe the recommendation is in the retail customer's best interest, taking into account both the costs and reasonably available alternatives. FINRA Rule 2111's suitability standard remains operative for non-retail customers and serves as the foundational compliance baseline even for retail customer recommendations, but Reg BI's heightened standard governs the retail customer context.
FINRA Rule 2110's Recommendations sub-grouping therefore now operates in a dual-standard environment — FINRA Rule 2111's suitability framework for non-retail customers and as the baseline compliance framework for all customers, overlaid by Reg BI's best interest standard for recommendations to retail customers. The supervisory framework FINRA Rule 3110 requires must address both dimensions, with written supervisory procedures reflecting the applicable standard for each customer type.
FINRA Rule 2110's Reference in FINRA Examination Findings
FINRA's 2022 Report on FINRA's Examination and Risk Monitoring Program explicitly references FINRA Rule 2110 alongside FINRA Rules 2010 and 3110 in connection with member firms' obligations to supervise all activity of registered representatives related to direct mutual fund transactions. This examination-findings citation confirms that FINRA Rule 2110 carries substantive regulatory weight in practice — FINRA examination staff treats compliance with the Recommendations sub-grouping's standards as an obligation whose supervision is specifically assessed, making it not merely an organizational label but a substantive compliance reference point whose presence in examination reports signals ongoing practical relevance.
The context of the 2022 citation — supervision of direct mutual fund transactions — connects FINRA Rule 2110 to one of the most common contexts in which recommendations obligations arise: registered representatives recommending specific mutual fund share classes, fund families, or fund types to retail customers. Direct mutual fund transactions (those processed through fund companies rather than through exchange or clearing infrastructure) present particular supervisory challenges because they may not flow through the firm's standard order management and supervisory review systems, making them more susceptible to going unreviewed for recommendations-quality compliance.
The Child Rules of the 2110 Sub-Grouping
FINRA Rule 2111, Suitability — the comprehensive suitability standard requiring members and associated persons to have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer based on the customer's investment profile. This dictionary has examined FINRA Rule 2111 in its prior coverage. The rule's three suitability obligations — reasonable basis suitability (the member must have a reasonable basis for believing the recommendation is suitable for at least some customers), customer-specific suitability (the member must have a reasonable basis for believing the recommendation is suitable for the specific customer), and quantitative suitability (the member must have a reasonable basis for believing a series of recommended transactions, even if suitable individually, is not excessive in light of the customer's profile) — remain the operative suitability framework for non-retail customers and the foundational framework for all customers.
FINRA Rule 2114, Recommendations to Customers in OTC Equity Securities — the additional recommendations standard applicable specifically to OTC equity securities, establishing that no member or associated person shall recommend a transaction in an OTC equity security unless they have reviewed available publicly available information about the security and have a reasonable basis for believing that the recommendation is suitable for the customer. This dictionary will examine FINRA Rule 2114 in the context of the confirmed remaining entries.
Connection to FINRA Rules 2010, 2090, 2100, 2111, 2114, 2120, 3110, and SEC Regulation Best Interest
FINRA Rule 2110 connects directly to FINRA Rule 2010 — as the foundational commercial honor standard whose transactional expression the Recommendations sub-grouping represents, with FINRA Rule 2110 appearing alongside Rule 2010 and Rule 3110 in FINRA's examination findings confirming the three rules' conceptual integration in the recommendations-supervision context. It connects to FINRA Rule 2090 — as the know-your-customer baseline that provides the customer information foundation upon which the recommendations framework of FINRA Rules 2111 and 2114 depends. It connects to FINRA Rule 2100 — as its parent series marker within the Transactions with Customers subsection. It connects directly to FINRA Rule 2111 and FINRA Rule 2114 — as the child rules whose operative content gives FINRA Rule 2110's Recommendations sub-grouping its substantive meaning. It connects to FINRA Rule 2120 — the immediately following series sub-marker for the Commissions, Mark Ups and Charges sub-grouping, confirming that the 2100 subsection moves from recommendations quality to pricing fairness as its two central themes. It connects to FINRA Rule 3110 — whose supervisory system requirements must specifically address the recommendations standards FINRA Rules 2111 and 2114 establish, with FINRA's examination findings repeatedly emphasizing the supervisory-recommendations-standard nexus. And it connects directly to the SEC's Regulation Best Interest — the higher best interest standard that governs broker-dealer recommendations to retail customers since June 30, 2020, operating alongside and above FINRA Rule 2111's suitability standard in the retail customer context.
Examination Relevance and Key Takeaways
FINRA Rule 2110 is tested on the Series 7 and Series 24 examinations as the series sub-marker for the Recommendations sub-grouping — the organizational framework within the Transactions with Customers subsection that groups FINRA Rules 2111 and 2114 as the operative recommendations standards.
The key points to retain are these: FINRA Rule 2110 has no operative text — it serves as the organizational sub-marker for the Recommendations sub-grouping within FINRA Rule 2100's Transactions with Customers subsection; its two child rules are FINRA Rule 2111 (Suitability — the comprehensive three-obligation suitability standard for all customer types) and FINRA Rule 2114 (Recommendations to Customers in OTC Equity Securities — the additional review requirement for OTC equity security recommendations); FINRA Rule 2110 carries substantive regulatory presence beyond its organizational function — FINRA's examination findings reference it alongside FINRA Rules 2010 and 3110 as a material compliance obligation governing recommendations supervision; the Recommendations sub-grouping now operates in a dual-standard environment, with FINRA Rule 2111's suitability standard governing non-retail customers and serving as the baseline for all customers, overlaid by the SEC's Regulation Best Interest higher best interest standard for retail customer recommendations effective June 30, 2020; and the supervisory framework FINRA Rule 3110 requires must specifically address the recommendations standards the 2110 sub-grouping's child rules establish, with direct mutual fund transaction supervision representing a recurring area of FINRA examination focus within this framework.
