Securities and Exchange Commission Chairman Mary Schapiro, in an open letter to the CEOs of the U.S., Schapiro noted recent news reports that some brokerages were using “enhanced compensation arrangements” to lure brokers, according to The New York Times. The deals may lead newly hired brokers to believe they must sell securities at high volume to justify the special compensation they were given, her letter said. ”Those pressures may in turn create incentives to engage in conduct that may violate obligations to investors,” Schapiro said. “Churning” customers’ accounts, or generating a high volume of trades to make more commissions. Schapiro urged CEOs to ensure investors interests are “carefully considered” in the sale of any investments.
SEC Warns Against Broker Bonuses
SEC Chairman Mary Schapiro warns CEOs against brokers looking to higher risks to make better commissions.
September 1, 2009