June 23 (Bloomberg) -- Stock brokers who switch firms will be able to keep their bonuses to themselves for at least a few months longer.
The Financial Industry Regulatory Authority withdrew a planned rule change that would have forced financial advisers who join new employers to tell their clients how much they got paid to do so. Finra, the industry-funded group that enforces brokerage rules, plans to revise the proposal later this year, according to George Smaragdis, a spokesman.
“The proposal generated 184 comment letters, and due to the rigid timelines imposed by Dodd-Frank by which the SEC must act on a proposal, Finra did not believe it could fully address the comments within those time frames,” Smaragdis said in an e-mail. Congress passed the Dodd-Frank Act in 2010 to overhaul regulations in the wake of the global credit crisis.
When firms such as Morgan Stanley and Bank of America Corp.’s Merrill Lynch poach salesmen from one another, they tie bonuses to revenue generated by the new employees, a situation that Finra said may create a conflict of interest as the brokers strive to reach targets. The rule change faced criticism from the industry’s biggest trade groups, which said in comment letters that while the goal of increased disclosure was admirable, the rule would be hard and expensive to implement.
InvestmentNews reported on Finra’s withdrawn plan earlier.
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