Updated Tuesday, September 23, 2014 as of 10:30 PM ET

Brokers Would Have to Disclose Signing Bonuses Over $50,000 in Finra Plan

(Bloomberg) -- Wall Street brokers who are lured to new firms with signing bonuses of at least $50,000 would be required to tell their clients under a rule proposed by the Financial Industry Regulatory Authority.

Finra, Wall Street’s self-regulator, posted the proposal on its website today after its directors voted last month to ask for comments on the plan. Brokers would have to tell their customers how much they received before convincing them to bring their accounts to the new firm, the regulator said.

Brokerages typically recruit financial advisers with “forgivable” loans -- a type of bonus that must be repaid if the employee leaves before a specified time or isn’t able to bring in as much business as promised. This may create a conflict of interest, Finra said.

The proposal would require brokers to tell clients of any “enhanced compensation” they receive in connection with the switch, including bonuses, loans and transition assistance. Institutional investors wouldn’t have to be informed.

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