Brokers Must Disclose Bonuses

Pile Of Coins

Stock brokers who are lured to new firms with signing bonuses of at least $100,000 will be required to inform clients under a rule approved by the Financial Industry Regulatory Authority.

Bloomberg News reports that Finra’s board of governors passed the proposal Friday, Wall Street’s self-regulator said in a statement. Brokers would have to tell their customers how much they received before persuading them to bring their accounts to the new firm, the regulator said. The plan must be reviewed and approved by the U.S. Securities and Exchange Commission, Finra said.

Brokerages from Morgan Stanley to Bank of America’s Merrill Lynch poach salesmen from one another, offering bonuses based on how much revenue they produce. The brokers typically must repay the bonuses if they don’t bring in as much business as promised, a situation that Finra said may create a conflict of interest as they strive to reach their targets.

'It will have an impact', said Michael King, a recruiter in New York who helps brokers switch firms. 'It’s going to make brokers think more carefully about how they’re going to broach it with clients'.

Hit the link below to access the complete Bloomberg article:

Brokers Must Disclose Bonuses as Finra Passes Rule

NYSE Wins Most Business Since ’09 as Markets Handle Volume Surge

SEC Sues N.Y. Advisory Firm Owner and Friend for Insider Trading

JefferiesAnd the Best Place to Work in the global financial markets 2018 is...

Register for HITC Business News