SIFMA Submits Comments to the SEC on FINRA's Proposal on Disclosure and Reporting Obligations Related to Recruitment Practices

SIFMA submitted comments to the SEC regarding FINRA's proposed rule change to adopt Rule 2243, Disclosure and Reporting Obligations Related to Recruitment Practices (the "Proposal"). In the letter, SIFMA expressed support for the underlying goal of the Proposal: to foster investor protection by requiring broker-dealers to disclose (in concise, plain English) certain potential conflicts of interest that may arise in connection with a registered representative's receipt of recruiting-related bonus payments.

Notwithstanding the general support for the concept, SIFMA contended that various operational challenges may not have been considered fully, and may adversely impact firms' ability to implement the Proposal efficiently and cost-effectively. These difficulties include objections to the proposed timing of the letter and the question of whether the firm required to send the letter would have access to the necessary customer information for compliance.

See: SIFMA Comment Letter.Related news: FINRA-Proposed Rule Regarding Disclosure and Reporting Obligations Related to Recruitment Practices (Fed. Reg.) (with Lofchie Comment) (March 28, 2014).