FINRA Proposes Disclosure Requirments for the Sale of Investments to Military Personnel
The Financial Industry Regulatory Authority (FINRA) has proposed increasing disclosure requirements on broker-dealers and their representatives that sell investment securities to military personnel or their dependents. The is the SRO‘s attempt to bring FINRA’s requirements in line with a federal laws aimed at protecting U.S. military members from unscrupulous financial service companies and their registered representatives.
Under a proposal, which was released last Friday, the new FINRA rules would require any firm or representative who is selling securities to military personnel on a military base to disclose those securities or investments have not been recommended or endorsed by the U.S. government.
The proposed rules for military members would retain the existing FINRA requirements regarding suitability and that brokers conduct reasonable due diligence to determine a customer’s investing experience and sophistication. Further, any brokers receiving referral fees or commissions for sales to military personnel would have to be affiliated with a registered broker-dealer and be properly licensed.
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