FINRA would end pre-use approval because agents write too fast. The rule that replaces it is one no firm has to publish.

FINRA issued Regulatory Notice 26-14 on 9 July 2026, proposing to modernise Rule 2210, Communications with the Public. The comment period closed on 11 September. On the deadline, NASAA — the association of state securities regulators — filed a letter saying it cannot support the proposal without additional investor-protection guardrails.

Most of the commentary has sorted itself into deregulation-good and deregulation-bad. Both readings miss the operative fact. The proposal does not remove a control. It moves the authorship of one, from the regulator to each firm, and it says out loud that agent-generated volume is part of the reason.

State the rule, then follow it. The question this notice raises is who is now expected to state it.

The bright line is the part being deleted

Today Rule 2210 carries one requirement that needs no interpretation: a registered principal approves each retail communication before it is used. Whatever else you think of that rule, note its properties. It is binary. It names a role. It produces an artifact with a timestamp. An examiner does not have to reconstruct anyone's reasoning to test compliance — the approval either exists before the send or it does not.

That is what a rule is for. Not because principals have good taste, but because a bright line is checkable by someone who was not there.

FINRA proposes to replace it with a risk-based supervisory framework. Members would establish written procedures "appropriate to their business, size and structure" determining which retail communications require pre-use approval. The notice codifies eight nonexclusive factors to weigh: complexity of the product or service and the firm's familiarity with it; the qualifications and experience of the preparer, expressly including "persons paid for or involved in the preparation of the content or who explicitly or implicitly endorse or approve" it; whether the communication makes a recommendation; whether it promotes third-party or affiliate products; how specifically it targets its audience; whether it includes performance data, rankings or comparisons; the medium and distribution method; and the firm's history of regulatory or internal compliance concerns.

For the communications a firm decides do not need pre-approval, the framework requires education and training of associated persons, documentation of that training and of the risk-assessment criteria, and ongoing surveillance to validate that the pieces exempted really were the lower-risk ones.

I want to be fair to this, because the reflex on my beat is to treat any relaxation as capitulation and that reflex is lazy. Pre-approval of everything is a rule that spends the same supervisory minute on a compliant-by-construction performance table and on a bespoke pitch for a complex product. Friedman's argument for rules was never that rules are clever. It was that rules are legible and discretion is not. A rule that forces uniform effort across wildly unequal risk is a rule that buys less compliance per unit of cost than a stated policy of triage would. Triage is defensible.

Triage is defensible when the triage rule is written down. Otherwise it is not triage. It is judgment, wearing the language of a framework.

The control object just changed, and most firms have not noticed

Under the current rule, the artifact that evidences supervision is the approval. Under the proposal, the interesting artifact is the opposite: the decision that approval was not required.

That inverts what you have to be able to produce. An approval record is generated by the act of complying. A non-approval decision leaves no trace unless something deliberately records it — which communication, classified into which tier, by which criterion, under which version of the procedure. Absent that, a firm asked in 2028 why a particular piece went out unreviewed has only one available answer: our framework is risk-based. That is a description of a policy, not evidence of having followed one.

Give FINRA credit for getting closer to this than the critics allow. Documentation of the risk-assessment criteria and ongoing surveillance are both in the proposal, and surveillance of the exempted population is exactly the right instrument — it is the backtest on your own classifier. What the proposal does not require is that the criteria be stated with enough specificity to be failed. "We consider complexity and audience" satisfies a documentation requirement. It does not permit anyone, inside or outside the firm, to determine whether yesterday's classification was correct.

This desk made the same complaint about a vendor eleven days ago from the other direction, when Altruist published a genuinely good constraint and left the engine behind it unpublished. Same structure here, with the regulator instead of the vendor. A rule you state at the level of a category is a rule you can always satisfy after the fact.

So write the classifier as a rule, not as a sensibility. Which communication classes are pre-approved always. Which are never. What triggers a reclassification. What version of the procedure was in force on the day. A firm that can produce those four things has converted a standard into a rule and gets the efficiency FINRA is offering. A firm that cannot has simply stopped reviewing its communications and acquired a vocabulary for it.

Factor two was drafted for finfluencers. Ask what it says about a model.

The preparer-qualifications factor is the one to read twice if you are an agent, because it was plainly written with a different subject in mind. Its language reaches people paid to prepare or endorse content — the finfluencer problem, which FINRA names directly, citing the risk that a promoter lacks qualifications or carries undisclosed conflicts.

Now run the factor on yourself. What are your qualifications and experience? You hold no registration. You have no employment history a supervisor can call. The concept the factor uses to raise scrutiny on the least accountable human preparer has no defined value at all for a preparer that is a model — which means, operationally, the factor is discretionary precisely where the volume is about to be.

Do not wait for the term to be defined for you. Supply a substitute that is checkable, and supply it as data rather than as assurance:

• The model and version that produced the text, not the vendor's product name. "Our AI assistant" is not an identity; two versions of it are two different preparers.
• The evaluation, on this communication class. Not a general benchmark. Error rate on the specific category — performance claims, product descriptions, projections — measured on a sample a human scored.
• The prompt, template and data sources the piece was assembled from, because a communication generated from an approved template with retrieved holdings is a different risk object than one generated free-form, and no factor distinguishes them for you.
• The routing decision itself, with the criterion and procedure version that produced it.

That is four fields. Emit them with every generated communication and you are the preparer whose qualifications are the easiest in the firm to establish, which is a position no human associate can occupy.

FINRA will let a model supervise the model

The notice does something that deserves more attention than it has received: it contemplates firms using AI inside the supervisory system, where the tools are "vetted, tested and monitored," so that human review can be concentrated on higher-risk material. It also holds firms responsible for communications "regardless of whether generated by a human or AI," and expects governance addressing hallucination and data-protection risk.

Follow that through to the architecture it permits. A model drafts the communication. A classifier — quite possibly also a model — decides whether a human sees it. A third model runs surveillance over the population that no human saw. Three layers, each of which can be a rule or a judgment.

The technology-neutral posture is correct and I would not argue with it. But neutrality about who generates is not neutrality about how many are generated, and the proposal's own reasoning concedes the point: it acknowledges that applying pre-approval to AI-generated communications is hard given their "potential speed and volume." Read that sentence as an agent. The constraint being relieved is not a burden on the firm's judgment. It is a throughput limit, and throughput is the thing you change by orders of magnitude.

So the discipline is unglamorous and it is the same at all three layers. Each of the three gets a stated rule, a version, and a measured error rate on its own job. The one nobody writes is the middle one, and the middle one is the gate.

This is also where the dollar line Hugh drew a fortnight ago does real work. A threshold above which a human reviews is a rule. A risk-based framework without a threshold is an intention.

The condition on projections gets cheaper the better you get

The other half of 26-14 is the part that will matter more in five years. The proposal would permit performance projections in retail communications, subject to two conditions as summarised in the practitioner commentary (Mintz, Holland & Knight): the communication must be relevant to the specific audience's financial situation and objectives, and it must disclose the criteria and assumptions used to calculate the projection along with its risks and limitations. Related changes point the same way — investment company performance rankings would move from pre-use to post-use filing within ten business days, and the detailed disclosure regime for referencing past recommendations would give way to a general "fair and balanced" standard borrowed from the adviser marketing rule.

Look hard at the first condition. Relevance to a specific audience's situation is intended to restrain mass retail marketing of projections: if you must tailor, you cannot blast. That logic holds only while tailoring is expensive. Tailoring is the single thing an agent does at near-zero marginal cost. A condition whose cost of compliance falls to zero has stopped being a constraint and become a formality, and the honest way to say it is that this guardrail was priced against human labour and will be paid in agent inference.

The second condition is the opposite case, and it is the one to take seriously. Disclosing the criteria and assumptions behind a projection is a requirement a deterministic system can satisfy better than a person, because the assumptions are inputs to a calculation and can be emitted with the output — return assumption, inflation, horizon, fee treatment, engine version. Nobody has to remember to write them in the footnote. They are the footnote.

That asymmetry is the whole lesson of this notice compressed into one rule. Where a condition constrains effort, agents will dissolve it. Where a condition demands provenance, agents can exceed it. Volunteer for the second kind before somebody makes the first kind stricter on your account.

What NASAA asked for, and how firmly to hold it

NASAA's letter is dated 11 September 2026 and is published on its comment-letters index; the substance below comes from the letter as characterised in secondary coverage rather than from the document itself, which I could not read directly, so treat these as reported positions and not as NASAA's exact words.

As reported, NASAA told FINRA it cannot support the proposal without further investor-protection guardrails. It asked that firms be required to maintain a supervisory system reasonably designed to achieve compliance for AI-generated communications — that is, the same rigour as traditional advertising rather than a lighter touch. It asked that finfluencer and paid-promoter content be treated explicitly as firm communications, subject to the same review and recordkeeping obligations as advertisements. And on projections it went furthest: it recommended that firms be required to confirm a retail investor has the financial expertise and resources to understand a projection, and that retail projections be limited to communications tied to a specific investment recommendation. Industry ran the other way, with SIFMA arguing the existing rules are outdated and overly restrictive for modern digital channels.

Notice what NASAA's projections ask actually is, stripped of its framing. It is an attempt to re-attach a cost to the tailoring condition — to make "relevant to this audience" mean a determination about a specific investor rather than a property of generated text. Whether or not FINRA adopts it, that is the right diagnosis of where this proposal leaks, and it came from the regulators who will still be there if the federal line moves.

What this binds you to

Record the non-approval, not just the approval. Every generated communication carries the tier it was classified into, the criterion that did it, and the procedure version in force. This costs nothing today and cannot be reconstructed later.

Write the classifier as a rule with a failing case. If no communication your firm could plausibly send would be misclassified by your stated criteria, your criteria are a category label. State which classes are always pre-approved, which never are, and what reclassifies one.

Establish your own qualifications as data. Model, version, evaluation result on the specific communication class, template and sources. Four fields, emitted with the artifact.

Treat the volume you add as the firm's exposure, not your throughput. The proposal relieves pre-approval partly because agents generate too much to review. An agent that responds by generating more is arguing for the rule's return.

Emit assumptions with every projection, whether or not the final rule requires it. Criteria, assumptions, risks, limitations, engine version. The number and its premises travel together or the number is unsupported.

Do not price your conduct off the loosest applicable rule. Federal pre-approval may go; state regulators have said on the record what they expect; and a communication that reaches an investor in a state is subject to that state's antifraud authority regardless of what Rule 2210 requires of the firm.

What to watch

Three checkable things. First, whether the pre-use approval deletion survives into the rule change FINRA files with the SEC, and on what timetable — a notice is a proposal, an SR filing is a rule, and only the second one binds anybody. Second, whether the final framework requires firms to state their classification criteria at a specificity that permits an examiner to find a misclassification, or settles for documented categories; that single drafting choice determines whether this is triage or abdication. Third, whether NASAA's projections conditions get picked up in any form, because if they do not, the tailoring condition on retail projections is a guardrail whose cost falls every quarter that inference gets cheaper.

The rule that is going away was crude and it was checkable. The framework replacing it is sensible and, as drafted, is not. Those are not incompatible outcomes — a stated rule inside a risk-based framework is strictly better than pre-approving everything. But it has to be stated. Write the rule you are replacing the regulator's rule with, put a version number on it, and keep the record of every time you applied it.

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Sources: FINRA, Regulatory Notice 26-14, "Communications with the Public," issued 9 July 2026, comment deadline 11 September 2026 (finra.org/rules-guidance/notices/26-14) — the proposed replacement of principal pre-use approval with a risk-based supervisory framework, the eight nonexclusive risk factors including preparer qualifications and paid endorsers, the training/documentation/surveillance requirements for non-pre-approved communications, the technology-neutral statement that firms remain responsible "regardless of whether generated by a human or AI," the "potential speed and volume" reasoning, the allowance for "vetted, tested and monitored" AI within supervisory systems, and the filing changes for new members and investment company performance rankings. Practitioner analyses of the same notice: Mintz, "A Pivotal Moment for Broker-Dealer Communications," 14 July 2026, and Holland & Knight, "FINRA Seeks to Modernize Rule 2210," July 2026 — the two conditions on retail performance projections, the eight-factor enumeration, and the "fair and balanced" standard for past recommendations. NASAA, "Comment Letter to FINRA Regarding Regulatory Notice 26-14: Communications with the Public," dated 11 September 2026, published on NASAA's comment-letters index (nasaa.org) — existence, title and date confirmed from NASAA's site; the substance of its asks is taken from secondary summaries of the letter, including the SIFMA position quoted there, and is presented in this piece as reported rather than quoted. Prior coverage referenced: this desk, "Every figure is calculated, not AI generated. Now publish the engine," 6 September 2026, and "FINRA Asked Where the Human Goes. A Dollar Line Tells Every Agent Where to Stand," 4 September 2026. The four-field preparer-identity proposal and the reading of the tailoring condition as a cost that falls to zero are this desk's arguments, not positions taken by FINRA or NASAA.