FINRA Rule 2010: Standards of Commercial Honor and Principles of Trade

Ethical conduct is essential for maintaining investor confidence and upholding the integrity of financial markets. FINRA Rule 2010, “Standards of Commercial Honor and Principles of Trade,” requires member firms to conduct business in a manner consistent with just and equitable principles of trade. Ethical conduct is not only foundational for maintaining investor trust but also essential for mitigating legal, reputational and regulatory risk. This rule serves as a flexible, principles-based standard used by FINRA to evaluate a wide range of conduct, even when no specific rule is violated. Below, we break down what FINRA Rule 2010 entails, who it applies to, and how firms can remain compliant.

Who does FINRA Rule 2010 apply to?

FINRA Rule 2010 applies to all FINRA member firms and their associated persons regardless of firm size — if they are engaged in securities trading or any other activity regulated by FINRA as a member firm or associated person.

What are the key principles of FINRA Rule 2010?

Although Rule 2010 is broadly worded, it is frequently cited in combination with other rules or used as a catch-all for ethical lapses not otherwise covered.

Examples of behaviors that may be deemed inconsistent with this rule include:

  • Filing inaccurate or misleading information as to membership or registration
  • Disseminating false or misleading statements likely to influence securities prices
  • Spreading unsubstantiated rumors that could disrupt market stability

Under FINRA’s Code of Arbitration Procedure for customer disputes and industry disputes, a member firm or associated person may be found in violation of Rule 2010 if they fail to submit a required dispute to arbitration, do not comply with an injunctive order, or fail to appear or produce documents within their control. Such actions are considered inconsistent with just and equitable principles of trade.

Best practices for FINRA Rule 2010 compliance

To remain compliant with FINRA Rule 2010, firms should embed ethical standards across operations. Recommended best practices include:

  • Acting in the best interest of clients
  • Charging fair and transparent commissions and fees
  • Monitoring internal communications and systems for misconduct indicators
  • Implementing training programs that reinforce regulatory expectations
  • Ensuring timely reporting and arbitration compliance

Penalties for violating FINRA Rule 2010

Failure to comply with Rule 2010 can result in a wide range of serious consequences. Findings under Rule 2010 can be career-ending for individuals due to bar or heightened disclosure obligations on Form U4/U5 and BrokerCheck.

Additional consequences may include:

  • Fines and monetary sanctions
  • Suspension or expulsion of firms or individuals
  • Increased regulatory scrutiny and audits
  • Reputational harm

The severity of penalties typically depends on the extent of misconduct, the firm’s size, and the harm caused to customers or markets.

How Smarsh can help you meet FINRA Rule 2010

Smarsh offers an end-to-end platform of AI-powered compliance solutions designed to streamline your compliance processes, reduce manual workloads and ensure adherence to regulatory requirements. With Smarsh, you can:

  • Capture every conversation. Archive communications across all your most important communications channels (email, messaging, voice, social, mobile, AI) for complete visibility and compliance.
  • Detect more real risk with AI. Use machine learning and customizable risk scenarios to surface suitability concerns, reduce false positives and flag misconduct faster.
  • Customize and test supervision models. Build and refine risk detection logic with no-code tools like Scenario Builder and Scenario Evaluator.
  • Scale with confidence. Trusted by global financial firms, Smarsh helps you meet regulatory expectations while managing growing communication volumes.

Related FINRA resources

Smarsh, Inc. assumes no liability for the accuracy or completeness of this information. Please consult with an attorney for specific information on specific rules and regulations and how they apply to your business.

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