Displaying items by tag: finra

(New York)

Advisors keep your eyes open, FINRA has put out a new warning on what not to do. The regulator says that dually-registered advisors need to be very careful when moving client funds from a brokerage to an advisory account. FINRA explains best, saying “Finra will review situations in which registered representatives recommend a switch from a brokerage account where that switch clearly disadvantages the customer … such as where the registered representative recommended that the customer purchase a securities product subject to a front-end sales charge in a brokerage account and then shortly thereafter recommended that account be transferred to a fee-based account”.

FINSUM: This is sort of a suitability/fiduciary rule hybrid type of enforcement. We thought all advisors should be aware that FINRA is on the lookout for this.

(Washington)

The battle over client is heating up again. On one side stands the broker, and on the other, the firm. Who owns the client relationship? Both say they do. Some may have been wondering where FINRA stands on the issue. However, the regulator has just taken the easy way out, saying it has no stance on the question. FINRA says it is not involved in the broker protocol and takes no sides on the topic, though it does have arbitration rules to handle disputes. Brokers want a FINRA rule, or at least process on the issue, with one attorney saying “Finra needs to convene an industry conference to finally be able to decide on what’s a workable definition of who owns the customer … There’s got to be a better way of doing this than TROs and arbitration”.

FINSUM: The broker protocol seems likely to completely dissolve this year. Hopefully something workable will take its place, because the legal alternatives are not great for anyone (other than lawyers!).