In the News

FINRA Warns BDs to Better Manage Conflicts of Interest

October 18, 2013
by Melanie Waddell, ThinkAdvisor

New report tells BDs to use fiduciary-like methods to handle conflicts or FINRA may make a new disclosure rule

The Financial Industry Regulatory Authority is warning broker-dealers in a new report that if they fail to implement fiduciary-like methods to better manage their conflicts of interest, a new disclosure rule may be in the offing.

FINRA developed its conflicts report after a year of gathering firms’ responses as part of the self-regulator’s conflicts initiative, which it launched last July.

The report notes conflicts of interest among BDs have improved, but points to three “critical” areas where BDs still need to make headway: firmwide frameworks, new products and compensation practices.

FINRA notes in its report that while areas of conflict have been addressed via rulemaking,

Billionaire Schorsch to Buy Investors Capital, Hatteras Funds

October 2, 2013
by John Sullivan, ThinkAdvisor

Real estate mogul Nicholas Schorsch continued his newsmaking run on Wednesday, with the announcement that one of his firms, RCS Capital Corp., has filed preliminary paperwork to purchase the independent broker-dealer Investors Capital Corp.

The news comes on the heels of a similar announcement on Monday that RCS would acquire the liquid alternative investment firm Hatteras Funds, as well as the announcement in early September that high-profile Advisor Group president Larry Roth would join Realty Capital Securities, the nontraded REIT broker-dealer and wholesaler arm of RCS Capital, as its CEO.

The announcement states that longtime Investors Capital Corp. president and CEO Tim Murphy and Hatteras Funds founder David Perkins will continue in their leadership roles with their respective firms.

Finra backs incentive comp disclosure rule

September 19, 2013
by Mark Schoeff Jr., Investment News

The board of the Financial Industry Regulatory Authority Inc. has approved a proposal that would require brokers to disclose the amount of incentive pay they received to switch firms.

Recruiting compensation of $100,000 or more — including signing, upfront or back-end bonuses, loans, accelerated payouts and transition assistance — would have to be disclosed to any customer who followed a broker to a new firm within one year of his or her transition. The broker also would have to disclose future compensation based on performance.

The reporting threshold was increased from the $50,000 level in the original Finra proposal released this year.

Firms would have to disclose to customers compensation paid to new recruits in the ranges of $100,000 to $500,000,