Firms may be able to avoid the possibility of receiving a "Restricted" designation with The Financial Industry Regulatory Authority's (FINRA) one-time opportunity. Brokerages can terminate advisors with flagged BrokerCheck records within 30 days and avoid the newly established designation.
FINRA sent letters to some brokerages stating that the firms met the Preliminary Criteria for Identification outlined in Rule 4111. Attorneys representing firms that received letters shared that they are unaware of how FINRA plans to determine which firms will ultimately receive the designation or how many terminations are required, according to AdvisorHub. FINRA's letter ensured that if FINRA concluded the firm's staffing levels were successfully reduced, it would cease any further review.
Alan Wolper, a partner at Ulmer & Berne, said that he has two brokerage clients who received letters and plans to contest one of them. Wolper shared that one of his clients has no option to reduce staff because a senior executive is the one with the marred record.
While Rule 4111 seems unfair to many, its implementation has spurred new business. Through the encouragement of their employees, more advisors seek expungement of disclosures.
Financial Advisor Transitions consults advisors nationwide to explore employment transition options and to preserve and protect their practice in any transition that they make.
