News & Media

FINRA Warns Firms Not to Lie or “Obfuscate” When Clients Ask About a Departed Rep

When a registered representative (“Rep”) with a large book of customers voluntarily resigns from one firm to join another, the Rep’s old firm immediately assigns a replacement. Excited about the potential to keep the book, the replacement Rep frequently races to contact the customers and secure their business. And when some of those customers question what happened, the replacement Rep – perhaps out of youthful enthusiasm – might “play dumb” by pretending not to know why the departing Rep left the firm, or worse, may imply that the departed Rep retired, was fired, or left because of customer complaints, poor investment recommendations, or some cloud of suspicion.

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