In response to “recent press reports” — probably this FT article — SEC Chairman Mary Schapiro sent an open letter to broker-dealer CEOs (see below) requesting them to be “particularly vigilant in ensuring that sales practices are closely monitored.”

It’s good to see her on record, though I suspect she won’t have any impact until she uses her power to make life miserable for shady brokerages.

She’s got good reason to be worried, of course. The FT article noted that happy days are here again if you’re a broker looking for a job:

Bank of America’s Merrill Lynch unit is offering signing packages greater than those handed out in the bull market of 2006 and 2007, as it ramps up its recruitment programme to replace many financial advisers who have left its “thundering herd” in the past year.

…Industry recruiters and people in the company say Merrill Lynch Global Wealth Management is offering signing bonuses of 140 per cent of the previous 12 months’ “production” to lure top advisers, and another 200 per cent over the next five years if the advisers hit aggressive growth targets.

“That’s more than they’ve ever offered,” said one recruiter. “It’s huge.”

Fat, commission-based pay packages will encourage brokers to churn accounts, put investors into unsuitable financial products and engage in other ethically-questionable behavior.

Writing this letter is a nice way to put people on notice, I guess. It can’t do much else.

(For easier reading, click “toggle full screen” top-right and then “+” to zoom in)