{"id":3084,"date":"2014-06-24T00:00:00","date_gmt":"2014-06-24T04:00:00","guid":{"rendered":"http:\/\/silverlaw.lawblogger.net\/blog\/finra-proposes-new-rule-to-make-brokerage-fees-more-transparent-to-customers\/"},"modified":"2017-12-22T14:13:29","modified_gmt":"2017-12-22T19:13:29","slug":"finra-proposes-new-rule-to-make-brokerage-fees-more-transparent-to-customers","status":"publish","type":"post","link":"https:\/\/www.silverlaw.com\/blog\/finra-proposes-new-rule-to-make-brokerage-fees-more-transparent-to-customers\/","title":{"rendered":"FINRA Proposes New Rule to Make Brokerage Fees More Transparent to Customers"},"content":{"rendered":"<\/p>\n

The Financial Industry Regulatory Authority (FINRA) has recently sponsored a new securities industry rule that makes the information included on customer account statements more transparent.\u00a0 Transparent commissions will likely lower the total up-front commissions a broker can collect on certain popular securities as investors realize the steep fees they are paying.<\/p>\n

Nontraded real estate investment trusts (REITs) are among the most popular investment products sold by registered representatives and their broker-dealers.\u00a0 Typically sold for less than $10 per share, the commission to a rep and the firm in this $1.4 billion \u201calternative investment<\/a>\u201d sector of the retail investment market is 7%, though the amount that goes toward the total upfront commission is split amongst several different players involved in selling the REIT.\u00a0 A problem for investors is that their account statements do not clearly show the breakdown of those commissions or the estimated per-share valuation of their investment — something that the current rules do not require be revealed to them until 18 months after the REIT sponsors stop raising funds.<\/p>\n

Under FINRA\u2019s proposed new rule, the time frame in which broker-dealers will have to show investors a true valuation of such purchases will be drastically sped up.\u00a0 By accelerating that timetable, investors will be provided quicker and much greater transparency in seeing the commissions being charged to them; and industry experts anticipate that broker-dealers are likely to lower the fees they assess to investors on such alternative investments<\/a>.\u00a0 Both nontraded REITs and illiquid private placements known as \u201cdirect participation programs\u201d (DPPs), which would also fall directly under this new rule, have frequently been criticized for high commissions.<\/p>\n

Continue reading \u203a<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

The Financial Industry Regulatory Authority (FINRA) has recently sponsored a new securities industry rule that makes the information included on customer account statements more transparent.\u00a0 Transparent commissions will likely lower the total up-front commissions a broker can collect on certain popular securities as investors realize the steep fees they are paying. Nontraded real estate investment […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[598,588,605,610,594],"tags":[448,341,503,544,545,150,428,102],"class_list":["post-3084","post","type-post","status-publish","format-standard","hentry","category-alternate-investments","category-finra-arbitration","category-finra-regulatory-notice","category-private-placement-memorandum","category-real-estate-investment-trusts","tag-alternative-investments","tag-commissions","tag-finra-regulatory-notice-2","tag-mutual-funds-2","tag-private-placement-memorandum-2","tag-reits","tag-securities-violations","tag-variable-annuities-2"],"yoast_head":"\nFINRA Proposes New Rule to Make Brokerage Fees More Transparent to Customers — Securities Arbitration Lawyers Blog — June 24, 2014<\/title>\n<meta name=\"description\" content=\"The Financial Industry Regulatory 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\/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"FINRA Proposes New Rule to Make Brokerage Fees More Transparent to Customers — Securities Arbitration Lawyers Blog — June 24, 2014","description":"The Financial Industry Regulatory Authority (FINRA) has recently sponsored a new securities industry rule that makes the information included on customer — June 24, 2014","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.silverlaw.com\/blog\/finra-proposes-new-rule-to-make-brokerage-fees-more-transparent-to-customers\/","twitter_card":"summary_large_image","twitter_title":"FINRA Proposes New Rule to Make Brokerage Fees More Transparent to Customers — Securities Arbitration Lawyers Blog — June 24, 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