The Financial Industry Regulatory Authority has launched a review of broker-dealers’ cross-selling programs, and is probing BDs on a laundry list of questions, including whether they’ve opened accounts for clients without their consent.
FINRA said in a statement that the self-regulator “often undertakes targeted reviews in areas of regulatory interest. In light of recent issues related to cross-selling, FINRA is focused on the nature and scope of broker-dealers’ cross-selling activities and whether they are adequately supervising these activities by their registered employees to protect investors.”
The self-regulator’s probe comes on the heels of the Wells Fargo fake accounts scandal, in which the bank opened 2 million unauthorized accounts to reach cross-sale goals. The bank was fined $185 million by the Consumer Financial Protection Bureau.
(Related: DOL Releases FAQs on Fiduciary Rule)
BDs are to produce the information (with supporting documents where noted) for the period from Jan. 1, 2011, through Sept. 30, 2016, by no later than Nov. 15.
Jon Henschen, founder of BD recruiting firm Henschen & Associates, said that the list of questions in FINRA’s crosshairs are cross-selling tactics that are “largely limited to bank, wirehouse and regional firms that have both financial and banking proprietary products.”