Finra seeks comments on bonus disclosure plan

Rule change would require registered reps to detail timing, amount, nature of comp

Jan 4, 2013 @ 9:53 pm

By Dan Jamieson

registered reps, finra, compensation
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Rick Ketchum, CEO of Finra, wants to hear from reps on his plan to increase compensation disclosure. (Bloomberg)

The Financial Industry Regulatory Authority Inc. is now taking comments on a proposal to require brokers to disclose recruiting incentives.

The notice was posted Thursday on Finra's website.

Finra is taking comments until March 5.

The rule change would require registered representatives to disclose details of their enhanced compensation arrangements to any customers they solicit for a period of one year after changing firms.

Oral disclosures would be required during an initial client contact and upon initiation of a transfer request, a written disclosure would be made with information about “the timing, amount and nature of the enhanced compensation arrangement,” Finra said in its notice.

Enhanced compensation would include signing bonuses, upfront or back-end bonuses, loans, accelerated payouts, transition assistance and similar arrangements, Finra said.

Enhanced compensation in an amount less than $50,000 would not have to be disclosed.

Finra wants comments about the costs and benefits of its proposal, as well as if a more general disclosure would be more effective.

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