(Dow Jones) Securities regulators are on the lookout for conflicts of interest that may arise from the large recruiting packages some broker-dealers offer the financial advisors they're wooing.

They're also taking a closer look at the sale of complex investment products.

The Financial Industry Regulatory Authority, or FINRA, began this fall conducting sweep examinations of half a dozen medium and large broker-dealers, according to Michael Rufino, the self regulatory organization's senior vice president and deputy of member regulation. Sweeps involve FINRA examiners looking into the same issue at a number of broker-dealers.

Finra wants to ensure newly recruited brokers aren't selling investment products in order to meet certain targets, such as those related to assets under management, that mean more money for the broker but aren't necessarily best for clients, Rufino said. The regulators are looking at issues such as employment agreements and whether firms are adequately supervising brokers.

Additionally, FINRA is looking into whether brokers disclose to clients when they receive large up-front and back-end bonuses for changing broker-dealers.

The examinations could lead the regulators to issue best practices for the industry concerning compensation packages for recruits, Rufino said. They could also lead to enforcement action.

The Securities and Exchange Commission is also focused on potential conflicts around financial adviser compensation.

SEC Chairman Mary Schapiro issued an open letter to broker-dealer chief executives in August expressing concern that certain recruitment pay packages, which may include large up-front bonuses and enhanced commissions for sales of investment products, could create incentives for brokers to recommend unsuitable products or engage in other activity that isn't in investors' interest. She reminded executives of their obligation to monitor such conflicts.

In what has become a recruiting arms race, broker-dealers vying for top recruits offer multiples of the fees and commissions brokers produced in the previous year--with a portion in up-front payments and additional bonuses for assets and production growth.

Additionally, as more mainstream investors are being sold more complex products, such as leveraged exchange-traded funds and indexed annuities, FINRA has issued guidance on the "retailization" of complex products to individual investors and is paying closer attention to disclosure and suitability issues.

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