FINRA looking at broker incentives, again.

Posted by on Oct 24, 2012 in FINRA, Investment Advisors, Stockbroker issues | Comments(0)

For as long as I’ve been involved in the brokerage business, brokers have had financial incentives. There are commissions, management fees, bonuses, trips to islands, one time there was even a contest that gave out nearly 100 leases on Porsche sports cars. FINRA knows this goes on.

Suzanne Barlyn reports that FINRA is looking at incentives again. Give me a break.

This really is the equivalent of the piano player at a bordello saying “you mean there’s women upstairs?” or words to that effect. FINRA knows this is going on. I remember going to an SIA (the predecessor to SIFMA) conference where the chair of the SEC said that recruiting bonuses were bad because they weren’t disclosed to customers. This was like 15 years ago!

FINRA is just getting around to looking at recruiting bonuses? I would say that 30-40% of all arbitration awards are for promissory note cases. And FINRA is just now noticing? Spare me.

I will be stunned if FINRA does anything because they won’t be able to figure out how to draw the line. Will it be when a broker gets a higher payout than grid? A forgivable loan? Expense account money? FINRA won’t be able to figure it out and the firms certainly aren’t going to help. But I doubt very seriously that FINRA is going to require a broker to disclose the terms of their employment with their new employer. I just don’t see it.

That’s the bemused view of one lawyer from Jupiter, Palm Beach County, Florida. I’m Marc Dobin

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