The Financial Industry Regulatory Authority recently issued Regulatory Notice 15-19 to solicit comments on a proposed rule that would require member firms that hire or associate with a registered representative (recruiting firm) to provide educational communications to (1) former retail customers of the transferring representative who the member firm, directly or through the transferring representative, tries to induce to transfer assets to the recruiting firm or (2) former retail customers who choose to transfer assets to the recruiting firm. FINRA is concerned that retail customers are not cognizant of all relevant factors to consider in making informed decisions regarding whether to transfer assets to their registered representative’s new firm.
The educational communication would need to highlight the possible implications resulting from the transfer of assets to the recruiting firm and also suggest questions the customer may want to ask in making an informed decision. The suggestions that the educational communication would highlight include whether financial incentives received by the representative may create a conflict of interest and the potential costs related to the transfer of assets.
The comment period expires on July 13.
Click here for Regulatory Notice 15-19.
