top of page

New FINRA Proposal Puts Responsibility on Investors

When a broker switches to a new firm, it will be up to clients to find out how big a bonus that broker is getting for making a move, according to a newly revised FINRA proposal.

Last Friday, the board of the Financial Industry Regulatory Authority authorized for public comment a proposal that would “require a recruiting firm to provide a FINRA-created educational communication” to clients of a broker who is switching firms. This ‘communication’ would suggest that clients ask their broker about their compensation in order to “highlight the potential implications” and to “make an informed decision” before following them to a new firm.

That is a departure from the original proposal, which would have required a broker’s new firm to outline compensation packages over $100,000 to clients. FINRA withdrew that proposal back in June, after receiving 184 comment letters.

Under the new proposal, what would have been a disclosure is now an ‘educational communication’ that puts the burden on investors to get answers for themselves.


bottom of page