Burr & Forman's Tom Potter Featured in Law 360 on "FINRA Exam and Spot Conflicts in Broker Pay."

Firm News


In an article published on August 24, 2015, Tom Potter was quoted discussing an examination letter that the Financial Industry Regulatory Authority (FINRA) has sent to several retail-oriented brokerage firms to find more information about how firms are managing and mitigating conflicts in broker-dealer pay practices. The letter is very detailed in its requests, requiring brokers to identify how its products are displayed, the orders in which they are displayed and who decided the order. "Another tricky request for firms is that they detail all types of payment received for more than 50 different products sold to retail clients," Potter said. "That's a pretty tall homework assignment. Back to school on conflicts."

The examination letter also delves into recruitment and compensation practices, which FINRA attempted to address last year with a controversial proposal demanding that brokers disclose when they receive a recruitment bonus of $100,000 or more to switch firms. While that proposal was ultimately cancelled, results from the examinations could impact a similar, but less-restrictive, proposal that provides clients with a list of questions to ask their broker before transferring their account to the broker's new firm. "That re-proposal, which recently saw an initial comment period close, feasibly could be made stronger depending on what FINRA sees in the current sweep," Potter said. "The more cynical among us would say that if they turn up disappointing results (in the sweep), then that gives them more ammo to go back to the well on their rule."

Law360 subscribers may read the full article here.


About Burr & Forman LLP
For over a century, Burr & Forman LLP's experienced legal team has served clients with local, national, and international interests in numerous industry and practice areas, ranging from commercial litigation and class actions to corporate transactions, including bankruptcy and restructurings. A Southeast regional firm with nearly 300 attorneys and nine offices in Alabama, Florida, Georgia, Mississippi, and Tennessee, Burr & Forman attorneys draw from a diverse range of resources to help clients achieve their goals and address their complex legal needs. For more information, visit the firm's website at www.burr.com.

Related Professionals

Jump to Page
Arrow icon Top

Contact Us

We use cookies to improve your website experience, provide additional security, and remember you when you return to the website. This website does not respond to "Do Not Track" signals. By clicking "Accept," you agree to our use of cookies. To learn more about how we use cookies, please see our Privacy Policy.

Necessary Cookies

Necessary cookies enable core functionality such as security, network management, and accessibility. These cookies may only be disabled by changing your browser settings, but this may affect how the website functions.

Analytical Cookies

Analytical cookies help us improve our website by collecting and reporting information on its usage. We access and process information from these cookies at an aggregate level.