FINRA Rule 2273: A Friend to Transitioning Reps- Part 1

Posted on January 29th, 2018 at 3:21 PM
 FINRA Rule 2273: A Friend to Transitioning Reps- Part 1

From the Desk of Jim Eccleston at Eccleston Law LLC:

Financial advisors transitioning to a new firm often contact their customers in order to retain their business.

FINRA Rule 2273 requires recruiting firms to provide registered representatives with educational communication materials that highlight key considerations for their customers to consider in deciding whether to transfer their assets to the new firm.

This is the first in a series of posts to guide brokers through the frequently asked questions regarding FIRNA Rule 2273.

Frequently Asked Question #1: Does Rule 2273 apply if the registered representative was hired by the recruiting firm prior to the effective date of the rule (November 11, 2016)?

According to FINRA, Rule 2273 applies only if the registered representative was hired by or associated with the recruiting firm on or after the effective date of the rule. Therefore, if a registered representative was hired before November 11, 2016, communications between former customers and the representative are not subject to the requirements of Rule 2273.

Frequently Asked Question #2: Does Rule 2273 allow member firms to alter the format of the educational communication while retaining the substance of the communication?

According to FINRA, member firms are not allowed to alter the format of the educational communications. FINRA has developed a standardized communication with a FINRA logo and member firms are required to follow the requirements of the form.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial advisors including Broker Litigation & ArbitrationStrategic Consulting ServicesRegulatory  MattersTransition Contract Review, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

Related Attorneys: James J. Eccleston

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