FINRA Rule 2273: A Friend to Transitioning Reps

Posted on February 8th, 2018 at 2:12 PM
FINRA Rule 2273: A Friend to Transitioning Reps

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 points for their customers to consider in deciding whether to transfer their assets to the new firm.

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

Frequently Asked Question #5: Would communication informing a customer that the registered representative is now employed by or associated with the recruiting firm constitute as “individualized contact” under Rule 2273? 

According to Rule 2273, “individualized contact” includes, but is not limited to, (1) informing the customer that the registered representative is now associated with the recruiting firm; (2) suggesting that the customer consider transferring his or her assets or accounts to the recruiting firm; (3) informing the customer that the recruiting firm may offer better or different products or services; or (4) discussing with the customer the fee or pricing structure of the recruiting firm. 

Frequently Asked Question #6:  When does FINRA require a recruiting firm to deliver communications to a customer when he or she has transferred their assets to the recruiting firm absent individualized contact?

Rule 2273(a) and (b)(2) requires the delivery of educational communications when customers transfer assets (1) on their own initiative; (2) in response to a general advertisement; (3) in response to a general posting on a social media website; or (4) after learning of the registered representative’s transition to the recruiting firm from another former customer.

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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Thank you for your professional assistance with this matter. You are very good at what you do.

John T.


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