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Jan 16, 2013

FINRA Proposes Disclosure of Recruitment Practices

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On January 4, 2013, FINRA published Regulatory Notice 13-02, proposing a new FINRA rule (the “proposed rule”) in connection with the recruitment compensation practices of member firms.

In short, the proposed rule would:

  • Require a member to disclose the details of any “enhanced compensation” provided to any registered person recruited from a “financial services industry” firm for one year following the date of association to any former customer with an account assigned to the registered person at the previous firm, who:
    • is individually contacted by the recruiting member or registered person, either orally or in writing, regarding the transfer of the securities employment (or association) of the registered person to the recruiting member; or
    • seeks to transfer an account from the previous firm to a broker-dealer account assigned to the registered person with the recruiting member.
  • Require disclosure of the details of enhanced compensation to be made orally or in writing at the time of first individualized contact by the recruiting member or registered person with the former customer after the registered person has terminated his or her association with the previous firm.

View full memo, "FINRA Proposes Disclosure of Recruitment Practices"

Authors and Contributors

Charles Gittleman

Of Counsel

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7317

+1 212 848 7317

New York

Russell Sacks

Partner

Financial Institutions Advisory & Financial Regulatory

+1 212 848 7585

+1 212 848 7585

New York

Steven Blau

Associate

Financial Institutions Advisory & Financial Regulatory

+1 212 848 8534

+1 212 848 8534

+1 416 360 2154

+1 416 360 2154

New York

Doreen E. Lilienfeld

Partner

Compensation, Governance & ERISA

+1 212 848 7171

+1 212 848 7171

+1 650 838 3804

+1 650 838 3804

New York

Kenneth J. Laverriere

Of Counsel

Compensation, Governance & ERISA

+1 212 848 8172

+1 212 848 8172

New York