What Is Broker Protocol

It should be noted that the brokerage protocol list at the beginning was essentially a broker-dealer list (since the broker protocol with its name focuses on broker-dealers and comes from wirehouses). However, in the current environment, the broker protocol membership list also includes a number of independent RIAs and other asset management firms. The reason for this is that, as mentioned earlier, both start-up and receiving companies must have signed the Broker Protocol Agreement for the Broker Protocol to apply to a moving broker. The following list includes a number of lawyers and law firms that work with brokers who must leave broker-dealers and ensure compliance with the broker`s protocol (or who need help transitioning to or from a firm that is not part of the protocol). Since the needs and execution issues are at least slightly different depending on whether the moving broker goes from/to a (different) wire house or to an independent broker-dealer or an independent RIA, the specialties of each firm (if any) are noted. It`s especially important not to tell customers in advance that you plan to leave and ask them to come with you. The reason for this is that, regardless of what you may think as a consultant, the customer relationship is technically and legally with the company, not with you. This means that asking you to consider a new move to your business before leaving your existing business is a violation of your employment contract with your current business and may result in (immediate) termination. It`s also helpful to realize that when it comes time for a transition, some assets/accounts receivable are easier to transfer than others. Although the terms of the brokerage protocol require the broker-dealer to allow the moving broker to receive certain client information and cooperate with ACAT`s subsequent transfer requests, exclusive funds that can only be held on the previous broker-dealer`s platform are still proprietary and do not need to be transferred. Similarly, not all third-party managers are available on all platforms and may not be transferable. While ultimately it`s always important to invest in solutions that are best for the client first, some solutions are more easily transferred to a new broker-dealer than others, which is a consideration when evaluating the products in which to invest clients` investment dollars in the first place.

To fully prove that the departing broker has only received the correct information about the client, he/she must actually provide a complete list of the exact information about the client that will be included when submitting a letter of resignation to the company [now previous]. In addition, the broker`s protocol requires the registered representative to provide the outgoing company with a list of all account numbers associated with these client accounts so that the company can confirm which accounts are protected by the agreement. [11] See Bruce Kelly, Morgan Stanley Dumps Broker Recruiting Protocol, Investment News (October 30, 2017, 11:26 a.m.), www.investmentnews.com/article/20171030/FREE/171039998/morgan-stanley-dumps-broker-recruiting-protocol. How do I join the protocol? Adhering to the protocol is easy and there is no fee to become a member. Companies wishing to join the Protocol should consider hiring a lawyer familiar with the agreement. Carlile Patchen & Murphy LLP has advised hundreds of registered agents and companies on how to join the Protocol and use its terms to transfer registered agents to new companies. [14] See Kenneth Corbin, How Morgan Stanley`s ex-broker Lawsuits Could Backfire, Oɴ Wᴀʟʟ Sᴛreet (February 28, 2018, 3:35 p.m..m.), onwallstreet.financial-planning.com/news/how-morgan-stanleys-ex-broker-lawsuits-could-backfire. By the early 2000s, litigation related to the recruitment and change of brokers had reached such a feverish level that the major telecommunications companies Smith Barney, Merrill Lynch and UBS signed a kind of „armistice agreement”, dubbed the „broker recruitment protocol”, which defined the conditions under which a broker could leave a broker-dealer and receive (limited) information about clients.

without fuelling the legal disputes and injunctions usual at the time. Although the relocation broker can take this information with him when he leaves, only this information can be recorded. Additional information, ranging from copies of bank statements and account numbers to any part of customer files or other customer data, goes beyond the scope of the broker`s protocol agreement (removal of protection for the moving broker and possible opening to Reg S-P violations, breach of employment contract or other legal disputes). Although the protocol speaks of „registered agents,” its acquisition by companies other than broker-dealers likely extends its scope to a broader class of financial professionals. .

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