One of the new priority areas in FINRA’s recently released annual Regulatory and Examination Priorities Letter suggests there will be increased oversight of firms whose reps switch customers from a brokerage account to an investment adviser, fee-based account. Founder and President Amy Lynch, exclusively quoted, believes this signals that firms should do extra surveillance around the timing of transactions to determine whether a switch to a fee-based account disadvantages the customer. Ms. Lynch describes the situation where firms have the mandate to promote fee-based accounts to meet compliance with the DOL Rule without fully considering how the transition may negatively impact the customer. See AdvisorHub, “FINRA Bearing Down on Securities-Backwed Loans and Rollovers.” The SEC, in a November 2017 report, also stated it will have a continuing larger focus on harm to retail customers. See our ComplianceAlert, “SEC Issues FY 2017 Enforcement Report and Priorities.”
