For as long as most compliance officers can remember, the rule for broker-dealers has been simple: you do not project performance. FINRA Rule 2210's content standards have long provided that communications may not predict or project performance, imply that past performance will recur, or make exaggerated claims. That bright line is now in play. FINRA has proposed to amend Rule 2210 to permit projected performance and targeted returns in member communications under limited conditions — and in an order dated May 20, 2026 (published in the Federal Register on May 26), the SEC declined to bless the change on the usual timeline and instead instituted proceedings to decide whether to approve or disapprove it.
If you are a broker-dealer or a dual-registered firm, this matters, but not in the way a breathless headline might suggest. Nothing has changed yet. The prohibition on projections is still the law. What changed is that a long-anticipated liberalization moved into an extended, and uncertain, review phase. Here is where things actually stand and what to do about it.
What FINRA Proposed
On February 10, 2026, FINRA filed a proposed rule change with the SEC (File No. SR-FINRA-2026-004) to amend Rule 2210. The proposal would allow a member to project performance, or provide a targeted return, with respect to a security, a securities portfolio, or an asset allocation or other investment strategy in its communications. The Federal Register published the notice of filing on February 25, 2026, and the public comment period closed on March 18, 2026.
This is not a green light to put projected returns in a mass-market ad. The proposal expressly would not extend to communications directed to a mass audience or intended for general circulation. Instead, it conditions the use of projections and targeted returns on a set of safeguards that should look familiar to anyone who has worked with the SEC Marketing Rule's hypothetical-performance provisions.
The Conditions That Would Apply
Under the proposal, a member using a projection or targeted return would need to satisfy several requirements. First, the member would have to adopt and implement written policies and procedures reasonably designed to ensure the communication is relevant to the likely financial situation and investment objectives of the intended audience. The proposal uses a facts-and-circumstances approach rather than a categorical institutional-only restriction, and it would permit firms to group investors into categories so long as the communication remains appropriate for each group.
Second, the member would need a reasonable basis for the criteria used and the assumptions made in calculating the projection or targeted return, and it would have to retain written records supporting that basis. Third, the communication would have to disclose the criteria and assumptions used — including how fees are treated — and the risks and limitations of using projections, including the reasons why actual performance might differ from what is projected.
Taken together, these conditions would shift projections from a flat prohibition to a permitted-but-controlled activity. That is a meaningful change in posture, but the controls are substantial, and they would have to be built and documented before a single projection went out the door.
How This Differs From the SEC Marketing Rule
Dual registrants should resist the temptation to assume the two regimes will now line up. They will not. The SEC Marketing Rule, Rule 206(4)-1, permits investment advisers to use several forms of hypothetical performance — including model performance and back-tested performance — subject to its own policies-and-procedures and disclosure conditions. FINRA's proposal is narrower. It would cover only projected performance and targeted returns, not the broader set of hypothetical-performance types the Marketing Rule addresses.
For a firm that is both an SEC-registered adviser and a FINRA member, that asymmetry creates real operational friction. The same set of materials can carry back-tested performance through the advisory channel under the Marketing Rule but not through the broker-dealer channel under Rule 2210, even if the projection amendment is approved. And a distributing broker-dealer generally would not be able to lean on an affiliated adviser's Marketing Rule analysis: under the proposal, the member would itself need to satisfy Rule 2210's conditions, including its own reasonable-basis documentation, rather than delegating that review to the adviser.
What "Instituting Proceedings" Actually Means
It is easy to read "the SEC instituted proceedings" as a rejection. It is not. Instituting proceedings is a procedural step under Section 19(b)(2)(B) of the Securities Exchange Act. After a self-regulatory organization files a rule change, the SEC can approve it, disapprove it, or institute proceedings to take more time and gather additional comment before deciding. FINRA had already consented, on April 7, 2026, to extend the Commission's deadline. The May 20 order moves the matter into that longer window; a final decision to approve or disapprove is expected later in 2026.
In other words, the proposal is neither dead nor adopted. It is in the regulatory equivalent of further review. (The order, Release No. 34-105524, was published in the Federal Register on May 26, 2026.) The change has also drawn attention from state regulators — NASAA submitted a comment letter dated March 18, 2026 on the filing — which is a reminder that performance projections are a sensitive area where investor-protection concerns run deep.
What Firms Should Do Now
The single most important point: do not change your practices yet. Until and unless the SEC approves the amendment, Rule 2210's prohibition on projecting performance remains fully in force. Any broker-dealer communication that projects performance or implies that past performance will recur is a current violation, regardless of what the pending proposal might eventually allow. The most common version of this mistake is forward-looking language that creeps into market commentary, charts that extrapolate historical returns, or "targeted return" figures borrowed from an affiliated adviser's materials.
That said, this is a good moment to prepare without acting. Firms should consider taking stock of where projections and targeted returns already appear — or are requested by registered representatives — across decks, one-pagers, and third-party materials, so they understand the demand they would be managing if the rule changes. Firms should also evaluate whether their written supervisory procedures, recordkeeping systems, and disclosure templates could support the reasonable-basis documentation the proposal would require, because building that infrastructure is not an overnight exercise.
Dual registrants in particular should evaluate how they would keep the two channels straight. If your advisory side already uses hypothetical performance under the Marketing Rule, map which of those materials would and would not be permissible through the broker-dealer channel even under the amended rule, and decide who owns the independent Rule 2210 analysis. Treating the adviser's Marketing Rule file as a substitute for the broker-dealer's own reasonable-basis record would be a predictable examination finding.
The Bottom Line
FINRA's proposal would loosen one of the more rigid lines in broker-dealer communications, but the loosening is conditional, narrower than the Marketing Rule, and not yet in effect. The SEC's decision to institute proceedings buys everyone more time — including firms that want to get their supervisory and documentation infrastructure ready before the rule, if approved, takes effect. As with any pending change, the right move is to track the docket, keep current practices compliant with the existing prohibition, and avoid building marketing programs around a rule that has not been adopted. (All dates and provisions described here are as of June 17, 2026.)
Compliance Approved reviews marketing and communications against both the SEC Marketing Rule and FINRA Rule 2210, with regulation citations attached to each flagged issue and a stored review history for exam readiness — useful whether you are policing today's prohibition on projections or preparing for a future in which limited projections are allowed.