“Wall Street brokers who are lured to new firms with signing bonuses of at least $50,000 would be required to tell their clients under a rule proposed by the Financial Industry Regulatory Authority.” (OnWallStreet.com, Jan 7, 2013, Zech Faux “Brokers to Disclose….”)
FINRA posted the proposal on its website after its directors voted last month to ask for comments on the plan. Brokers would have to tell their customers how much they received before convincing them to bring their accounts to the new firm, the regulator said. ( FA’s are generally recruited with a bonus which must be repaid if the advisor leaves or doesn’t bring in as much business as promised within a specified time.)
The proposal would require brokers to tell clients of any “enhanced compensation” they receive in connection with the switch, including bonuses, loans and transition assistance. Institutional investors would be exempt.
As the proposal was just posted last week, it will be interesting to watch reactions throughout the industry…assured of more to come.