SEC Chairman Mary L. Schapiro has put out a word of warning to broker-dealers who are using large bonuses, enhanced commissions and other financial perks to land top producers.

In a letter issued on Monday, Schapiro tells broker-dealer executives that they need to make sure such financial inducements don't lead to bad sales practices. "Some types of enhanced compensation practices may lead registered representatives to believe that they must sell securities at a sufficiently high level to justify special arrangements that they have been given," Schapiro wrote. "Those pressures may in tum create incentives to engage in conduct that may violate obligations to investors."

As an example, she wrote, registered reps who receive enhanced compensation for hitting increased commission targets may be motivated to churn customer accounts and, in the process, recommend unsuitable investment products to their clients.

"I therefore encourage broker-dealer firm CEOs and their fellow supervisors to be particularly vigilant in ensuring that sales practices are closely monitored and that investor interests are carefully considered in the sale of any security or other investment product," she wrote.

Schapiro stated the letter of warning was in reaction to reports that some firms are offering "substantial inducements" to recruit registered representatives.