Sept 11 (Reuters) - Wall Street's watchdog will present a plan to its board next week that would require brokers that get a bonus to switch firms to disclose that fact to clients they want to bring with them, according to an agenda posted on the regulator's website.
The proposal by the industry-funded Financial Industry Regulatory Authority will be discussed on Sept. 19, resurfacing after the regulator's board of governors postponed a review planned for its July meeting.
While the largest brokerage firms support the proposal, it has been controversial because some firms and brokers are reluctant to make those disclosures and fear it would ultimately limit compensation.
Richard Ketchum, FINRA's chairman and chief executive, began discussing the possibility of a bonus disclosure plan in late 2012. The regulator collected input from the securities industry about the plan early this year.
The board's postponement from July led to some speculation in the securities industry that the idea was losing steam. The delay, however, was due to scheduling issues, a FINRA official told Reuters in August. Some board members who were especially interested in the proposal could not attend the July meeting, the official said.
Disclosing a hefty bonus would inform investors of a conflict of interest their brokers may have when they ask clients to switch firms along with them, Ketchum has said. Switching firms could be costly to investors, who may have to sell certain securities, such as brokerage branded-mutual funds, that are not available through their broker's new firm, he has said.
FINRA must seek permission from its board of governors for sending rule proposals to the U.S. Securities and Exchange Commission for review and final approval. A final compensation disclosure rule, however, could be a long way off even if FINRA's board approves it. The proposal will be subject to another public comment period, and possible revisions, if it makes it to the SEC. (Reporting by Suzanne Barlyn; Editing by Linda Stern and Tim Dobbyn)