A controversial plan that would have required job-switching securities brokers to disclose signing bonuses to their clients is making a comeback, but the new version may be weaker and bear little resemblance to the original, some lawyers say.

The Financial Industry Regulatory Authority (Finra), Wall Street's industry-funded watchdog, will present a revised recruitment practices proposal to its board of governors on Friday, Sept 19, according to an agenda on the regulator's website.

While details of the plan are unclear, Finra's brief description of it may signal a retreat from the version that set off a firestorm on Wall Street ever since Finra first mentioned the plan in 2012, lawyers say.

The new agenda item describes a plan to require firms that lure brokers away from competitors to "provide an educational communication" to clients who may follow those brokers to the new firm. The original proposal would have required the disclosure of specific broker "compensation" - notably, the description of the new plan omits that word.

The wording "jumps out at you," said Tom Lewis, a lawyer in Princeton, New Jersey, who advises brokers on transitioning between firms. He and other private lawyers for brokers speculate that Finra may back off its original idea of requiring brokers whose bonuses are $100,000 or more to disclose to clients one of several dollar ranges in which their bonuses fall. The plan also would have applied to future payments contingent on performance criteria.

"I think this will be a much more benign version," said Lewis.

Finra's new plan may, instead, require only general explanations about recruitment practices and potential conflicts they may pose, the lawyers say. It would make sense for such a disclosure to explain that clients may ask about financial incentives their brokers received, as well as costs and tax issues for clients who transfer their accounts, said Marc Dobin, a lawyer in Jupiter, Florida, who represents brokers in employment disputes.

Such a change would appease the Securities Industry and Financial Markets Association, which had pushed for a "concise, direct and plain English" disclosure about conflicts of interest that recruitment bonuses may trigger, according to its letter to the SEC on April 17.

Finra has been concerned that recruitment incentives, mainly in the form of bonuses, may sway brokers to suggest that clients move their accounts to the broker's new firm. But those clients may not be able to hold the same securities or could incur new costs as a result, Finra has said. Brokers may recommend, unnecessarily, that clients sell off mutual funds run by their previous firms, so that clients will pay them commissions to buy funds run by the new firm.

The board's review could clear the plan for submission to the U.S. Securities and Exchange Commission, which must approve Finra rule changes. The board will consider the new proposal is being considered less than three months after Finra withdrew the earlier version it had submitted to the SEC in March.

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