Additionally, state regulators as well as the Public Investors Arbitration Bar Association, which represent investor plaintiffs’ attorneys, want Finra to mandate disclosure of the dollar amounts of recruitment deals.
“NASAA is disappointed that its prior call for greater transparency into this dark corner of industry practice has not been incorporated into the current proposal,” NASAA wrote.
The Charles Schwab Corp. also called on Finra to resurrect the detailed disclosures in the prior plan.
The current proposal “places the onus on the customer to pose questions to the transferring representative in the hope that the key information will be disclosed,” Schwab wrote.
The proposed disclosure requirement would apply for six months after a rep leaves a firm, but some industry commenters wanted that time frame reduced.
SIFMA also called for an exemption in cases where recruitment packages are worth less than $100,000 and, along with other commenters, wants an exemption for account transfers that occur as a result of a merger or acquisition.
Additionally, the big Wall Street trade group and several individual firms called on Finra to make clear that the delivery of the communication could not be used as evidence of a solicitation for purposes of litigation.
Finra may still amend the disclosure rule prior to filing it with the SEC for approval. A Finra spokeswoman did not know about the timing of a formal rule proposal.