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September 01, 2009 at 08:00 PM
SEC Chairwoman Mary Schapiro sent a letter to the CEOs of broker-dealers on Aug. 31 about upfront bonuses, special commissions and other recruiting methods. Her main point was to remind the CEOs of their supervisory responsibilities, according to the SEC.
Enhanced compensation arrangements “could induce brokers to engage in conduct that is not in investors’ best interest” and thus CEOs have “an obligation to police for such conflicts.”
In addition, the letter reminds CEOs that, as their firms grow, their supervisory and compliance infrastructures should retain sufficient size and capacity.
“I want to remind broker-dealer firms and their CEOs of the significant supervisory responsibilities you have under the federal securities laws to oversee broker-dealer activities, particularly with respect to sales practices,” she says.
