In the News

FINRA’s Big-Brokerage Loyalty Revealed in New Bonus Plan: Lawyer

September 22, 2014

By Melanie Waddell, ThinkAdvisor

New plan requires recruiting firms to provide a FINRA-created educational communication to former retail customers of a transferring rep

The Financial Industry Regulatory Authority issued for public comment on Friday a proposal that curtails its earlier draft rule requiring, in most cases, disclosure of recruitment bonuses and incentives.

The proposal would require recruiting firms to provide a FINRA-created educational communication to former retail customers of a transferring representative who are considering transferring assets to the rep’s new firm.

Patrick Burns, a lawyer for breakaway brokers, says that the proposed FINRA-created communication would highlight the potential implications of transferring assets to the new firm and suggest questions the customer may want to ask to make an informed decision.

Ladenburg Thalmann to buy Securities Service Network for $45M

September 22, 2014

By Bruce Kelly, Investment News

Ladenburg Thalmann Financial Services announced Monday that it had agreed to buy Securities Service Network Inc., known as SSN, which has close to 450 independent reps and advisers and produced $114.2 million in total revenue last year.

In a statement, Ladenburg Thalmann said it would pay $45 million in cash and stock for SSN, or 39.4% of annual revenue. That valuation, while not as high as some of the recent offers by Nicholas Schorsch and RCS Capital Corp., is in the historic upper range for such deals.

SSN is currently owned by a trust,

Advisers Must Avoid ‘Due-Diligence Lite’ on Asset Managers

By Daisy Maxie

September 10, 2014 Wall Street Journal

The regulatory troubles of F-Squared Investments are a reminder to brokers and investment advisers of the need to do more than simply review the numbers a mutual fund company or other asset manager offers to demonstrate financial health and prowess.

Analyzing how the company arrived at the numbers is critical, specialists in vetting asset managers say. F-Squared, which builds portfolios of exchange-traded funds, recently acknowledged a deepening investigation by the Securities and Exchange Commission into how it marketed some funds’ past performance.

Some brokerages dig deeper, or employ third-part specialists to help. In terms of ensuring that a performance record is accurate, most check to see if it is “GIPS compliant”–that is,