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"
