FINRA has delayed consideration of a highly contentious proposed rule on recruitment compensation disclosure.
The regulator was set to discuss the rule at the FINRA Board of Governors meeting on July 11. But due to scheduling considerations, the item has been pushed to a later date, FINRA spokesperson Nancy Condon said in an email. Condon had no additional information.
The proposal put forth by Regulatory Notice 13-02 seeks to address the potential conflicts of interest associated with recruitment compensation bonuses offered to advisors transitioning from one firm to the other. The rule would require specific disclosure by the recruiting member firm of the financial incentives a representative receives as part of his or her relationship with the new firm, a spokesperson said in an emailed statement.
In January, FINRA
Though the reason for the delay is unclear, recruiter Mindy Diamond of Diamond Consultants says its likely because the issue is complex and demands further discussion. There was a lot of specificity that needed to be applied to the proposal and I think thats why its been postponed because its an issue that requires a lot discussion, Diamond says. Its not black and white, its not something that can be addressed in five minutes. And so theyre putting it off.
Yet Diamond still expects the rule to eventually pass. I think everybody expects that it will pass at some point, were just not sure when.
The final proposal would require approval from FINRAs Board of Governors before going before the SEC.
Paul McCaffrey and Mason Braswell contributed reporting.
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