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If Finra eases firm oversight of outside business activities, broker-dealers could lose revenue

21:23 16 February in In the News by rafferty

February 15, 2018  By Mark Schoeff Jr. Investment News A pending Finra proposal to ease the requirement that brokerages supervise their representatives' work with unaffiliated registered investment advisers sounds like regulatory relief. But some brokerages are worried about the price for losing oversight of outside business activities. Monitoring an unrelated third-party adviser can be a hassle, but it also means broker-dealers can take a cut of their affiliates' RIA revenue, usually about 5%. The Financial Industry Regulatory Authority Inc. board advanced the proposal at its December meeting, but the agency has not yet released a rule proposal. Depending how it's written, obviating the need to supervise RIA work also eliminates the need to charge for that service. As more hybrid advisers shift from commission-based revenue to fee-based revenue, IBDs are eager to capture some of...

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Finra Warns B-Ds On Hiring Brokers With Spotty Records Living Large

16:57 22 January in In the News by rafferty

January 22, 2018 By Tracey Longo, Financial Advisor High-risk reps are finding it much harder to find a job these days, as Finra tightens the proverbial screws on firms that employ brokers with regulatory red flags. The Financial Industry Regulatory Authority has even begun calling firms that hire “high-risk” brokers to ask executives for explicit justifications for the hires. The threat made to firms, no longer even thinly disguised, is that hiring risky brokers will result in more frequent and far more rigorous Finra examinations for the B-D. The scrutiny is making it far tougher for any but the most profitable brokers to find a new firm if their regulatory record and background check puts them in Finra’s high-risk program hairs. If a firm runs the regulatory gauntlet and brings on a high-risk broker anyway,...

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FINRA Plan to Rid BDs of Advisor Liability Would Hit Firms’ Fee Revenue

19:50 12 January in In the News by rafferty

January 12, 2018 By Melanie Waddell, ThinkAdvisor The plan would resolve BD complaints about paying large fines for RIA compliance failures, recruiter Jon Henschen says The Financial Industry Regulatory Authority plans to issue a proposal that would free broker-dealers from keeping track and maintaining liability for registered investment advisor business — a huge win for hybrid BDs — but they’d also be forced to take a hit to fee revenues. FINRA’s Board approved at its December meeting the publication of a regulatory notice seeking comment on changes to its rule on outside business activities that seeks to streamline BDs' obligations by “generally excluding from FINRA’s rule on a registered person’s personal investments and work performed on behalf of a firm’s affiliate,” and eliminate supervisory obligations for non-broker-dealer outside activities, including investment advisory activities at an unaffiliated third-party advisor. No...