Finra plans to revive controversial broker compensation proposal

The regulator will consider a revised version of a rule requiring brokers to disclose recruitment incentives at its board meeting next week.

Finra will revive a proposal next week that would require brokers to disclose recruitment incentives to clients who follow them to their new firms.
On Thursday, the Financial Industry Regulatory Authority Inc. announced the rule would be on the agenda for its Sept. 19 board meeting.
In June, the industry-funded broker-dealer regulator withdrew the rule after receiving 184 comment letters. The organization had sent the rule to the Securities and Exchange Commission for approval in March, but the withdrawal came before any SEC action was taken.
The agenda for next week’s board meeting says the board “will consider a revised recruitment practices proposal” that would require brokers’ new firms to outline their compensation packages to clients from their previous firms who are considering transferring their assets with the brokers.
The original proposal would have required brokers to tell their clients about recruiting packages in excess of $100,000. Critics cited worries about implementation and a lack of clarity about what information had to be disclosed. Finra argued that recruiting disclosures are an important investor protection.