Finding A Way.

FINRA Cracking Down on “No Fee” Advertising

Investment adviser complianceFINRA recently expressed concerns about broker-dealers who advertise “free” or “no fee” services for retail brokerage accounts and individual retirement accounts (IRAs).

FINRA Rule 2210 requires that broker-dealers’ communications are fair and balanced and do not omit material information that would cause them to be misleading.

FINRA is concerned about transparency.  Broker-dealers’ marketing campaigns often claim that brokerage accounts and IRAs are free, for example when accounts are being rolled over. That’s often not the entire picture.  In reality, there may be fees for opening and maintaining the account, as well as commissions, management fees and other product-related costs. Sticking the not-so-nice in a footnote will probably not cut it either. Full disclosure should be in close proximity to the place where the claim of “no fees” is being made.

If you have any questions or comments regarding compliance with Rule 2210, please e-mail or tweet me.

Eckerle Law offers legal advice in a variety of transactional and regulatory matters and serves companies’ plenary business law needs. Its founder, Bettina Eckerle, is a veteran of Debevoise & Plimpton and Wachtell, Lipton, Rosen & Katz.  She also served as the General Counsel of two companies en route to IPO. Please visit the Eckerle Law website for more details.