The Securities Litigation Expert Blog

Finra Requesting Comment on Recruitment Compensation Practices

Posted by Jack Duval

Jan 8, 2013 2:17:50 AM

Finra has issued NTM 13-02 requesting comment on proposed rules to disclose compensation for brokers switching firms.  (NTM 13-02)

Here's the executive summary:

Many member firms offer significant financial incentives to recruit registered representatives to join their firms, yet these compensation arrangements are not disclosed to customers when they are asked to transfer their accounts
to a representative’s new firm. To address conflicts of interest relating to recruitment compensation practices, FINRA seeks comment on a proposed rule that would require specific disclosure by the recruiting member firm of the financial incentives a representative receives as part of his or her relationship with the new firm. The recruiting member firm would be required to provide the disclosure before a former retail customer of the representative makes a final determination to transfer an account to the new firm.

See our previous coverage on compensation disclosure here.

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Topics: FINRA, disclosure, registered representative, Investment Advisors, compensation, Compliance, regulation.

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