On April 5, the Financial Industry Regulatory Authority issued Regulatory Notice 19-10 addressing the responsibilities of member firms when communicating with customers about the departure of registered representatives who have direct contact with customers in the conduct of such member firm’s securities sales. The Notice reinforces two key expectations related to such communications.
First, in the event of a registered representative’s departure, member firms are expected to promptly and clearly communicate to affected customers how their accounts will continue to be serviced so that customers can make informed decisions about their accounts. Second, member firms are expected to communicate clearly when asked questions by customers about the departing registered representative. Such communications should, for example, clarify that the customer has the choice to (1) retain his or her assets at the current firm and be serviced by a new registered representative assigned by the firm or chosen by the customer, or (2) transfer such assets to another firm. As with all customer communications, FINRA expects that the information provided by member firms about the departing registered representative is fair, balanced and not misleading.
The Notice is available here.