FINRA Requests Comments on Proposal Concerning Recruitment Practices (FINRA Reg. Notice 15-19)

FINRA issued a regulatory notice requesting comments on a proposed rule that would require an educational communication be provided to customers of a transferring representative. The education communication highlights key considerations in transferring assets to the recruiting firm including the direct and indirect impacts of such a transfer on those assets. The proposed rule would require a member firm that hired or associated with a registered representative to provide such an education communication to former retail customers whom the member firm, directly or through the transferring representative, attempted to induce to transfer assets to it, or to former retail customers who chose to transfer assets to that recruiting firm.

According to FINRA, the educational communication would highlight the potential implications of transferring assets to the recruiting firm. It also would suggest questions that a customer may want to ask the firm in order to make an informed decision. The recruiting firm would be required to provide the educational communication at or shortly after the time of its first contact with a former retail customer regarding the transfer of assets.

Comments on the proposal must be submitted by July 13, 2015.

See: FINRA Regulatory Notice 15-19.