Client Advisories and Bulletins

"A Call To Action": A New Suitability Policy Statement For Online Firms

April 24, 2001

The NASD Regulation, Inc. (“NASDR”) yesterday issued a significant new Policy Statement affecting suitability duties of online firms and created new standards to assess whether online brokers deliver recommendations to customers and thereby raise suitability issues. 1 The new standards focus on the “content, context and presentation of information” and whether a firm’s services suggest a “ call to action” (a suggestion to a reasonable person that the customer should engage in a particular securities transaction) that would constitute a recommendation. Recognizing the significant benefits online firms have offered clients by making such data available, as well as the rapid changes in technology, NASDR clarified that online firms can continue to offer many of the services currently offered to clients without such services being considered recommendations.