In late October, the Financial Industry Regulatory Authority (FINRA) announced a sweep examination of broker-dealers targeting cross-selling programs similar to those that recently resulted in Wells Fargo’s payment of an $185 million settlement.
FINRA sent targeted exam letters to several broker-dealers, requesting extensive information for the period from January 1, 2011 through September 30, 2016. FINRA explained that the sweep aims to determine the incentives broker-dealer employees are given to:
-
promote bank products of a parent or other affiliated company to broker-dealer retail customers;
-
add features such as securities-based loans, credit or debit cards, or checking accounts to such customers’ accounts; and
-
open additional broker-dealer accounts for such customers.
The sweep letters request a strikingly broad range of information relating to cross-selling programs, including: employee compensation and discipline, metrics used to track and evaluate employee performance, revenues flowing from parents or
other affiliates, training materials and seminars, and customer complaints. Accordingly, for the firms that received demand letters, these are burdensome requests. Overall, the breadth of the sweep seems to reflect FINRA’s oft-repeated interest in the totality of firm "culture," as it relates to cross-selling practices. See "FINRA to Assess Member Firms’ Cultures," Expect Focus Vol. II, 2016.
According to reports, a FINRA official declined to comment on the specific number or size of firms that received letters pursuant to the sweep, but did state that "[i]n 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."
©2026 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.
