The SEC adopted new Rule 2273 ("Educational Communication Related to Recruitment Practices and Account Transfers") that establishes an obligation on its members to deliver an educational communication in connection with member recruitment practices and account transfers. In Regulatory Notice 16-18, FINRA provides guidance and material on compliance with the new rule. Specifically, the rule deals with a member firm that gains a new customer account via a newly hired representative who serviced the same customer at a prior firm. The member firm now is required to deliver an educational communication that would inform the customer of the costs (and other potential burdens) of following the customer's former representative to the new firm.
The new rule will become effective November 11, 2016.
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