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Securities Compliance Sentinel Analysis of cutting-edge securities industry issues

RETIRED BROKERS MAY CONTINUE TO COLLECT COMPENSATION

Posted in Broker-Dealer Regulation, Raiding/Moving Firms, Registered Representatives

The SEC’s Division of Trading and Markets assured a broker-dealer that a retiring registered representative would not risk enforcement action if, after termination of  the employment, he or she received certain compensation from the firm without maintaining his or her status as a registered associated person.  See Packerland Brokerage Services, SEC No-Action Letter, avail. 3/18/13 at http://www.sec.gov/divisions/marketreg/mr-noaction/2013/packerland-brokerage-services-031813-15a.pdf

The compensation to this soon to be retired registered representative would be derived from accounts held for the retiring brokers’ continuing customers.   The retiring registered representative may receive compensation in connection with money added post-retirement to such customers’ accounts, provided the firm, the retiring broker, and the receiving broker comply with the terms of a November 2008 no-action response to SIFMA.  See http://sec.gov.divisions/marketreg/mr-noaction/2007/sifma112008-19h1.pdf.

This has always been an area of trouble, and this guidance may make it easier to transition clients to the next generation of registered representatives.