WASHINGTON — Broker-dealer firms can do more to manage conflicts of interest in their businesses, including by taking steps to deal more transparently with retail investors, according to a report published by the Financial Industry Regulatory Authority on Monday.
The report identifies certain conflicts of interest present in dealer operations and provides examples of actions firms have taken or could take to better manage those conflicts. The report touches on acting in the best interests of customers, disclosure of risk to customers and compensation of registered representatives. Potential conflicts exist in any relationship where a duty of care or trust exists between involved parties, the report states, noting that "the history of finance is replete with examples of situations where financial institutions did not manage conflicts of interest fairly." The report focuses solely on broker-dealers, which FINRA regulates.