Beware of Brokerage Firms' Misconduct
In late November, some 29 investment firms, including virtually all of Wall Street’s biggest names have been censured and fined a total of more than $9 million for more than 8,000 late disclosures of reportable information about their brokers including: customer complaints, regulatory actions and criminal charges and convictions. According to a recent National Association of Securities Dealers (NASD) news release, the NASD also prohibited two firms, Merrill Lynch and Wachovia, from registering new brokers for five business days, in view of the number of their reporting violations in this case and their previous poor regulatory filing histories. The NASD imposed a similar prohibition and a $2.2 million fine against Morgan Stanley in July for late reporting violations. We suggest that you pay special attention to the fact that these are only the number of “late” disclosures about securities violations, complaints, criminal charges and convictions; not the amount of actual incidents. These statistics are for the period January, 2002 through March, 2004 and we find the total number of incidences disgraceful. For example, Merrill Lynch based on the number of late disclosures, had a total of 4,733 incidents of customer complaints and regulatory actions, as well as criminal charges and convictions. Unbelievable! It is obvious that most people are not aware of the firms’ dishonest and poor ethical track record. Otherwise, who would have their money with them? All we can say is “SPREAD THE WORD!” Please see the chart below for a complete listing of the investment firms that have been recently censured and/or fined.
The NASD is the leading private-sector provider of financial regulatory services, dedicated to investor protection and market integrity through effective and efficient regulation as well as compliance and technology-based services.
If you believe that any of your family, friends, or acquaintances might want to verify his or her individual broker’s professional background or even a brokerage firm as a whole, you can refer them to search the NASD’s BrokerCheck, which is available at no charge to the public. Investors can access this service by calling (800) 289-9999.
The NASD has recently censured and fined the following firms:
*Take notice of the Failure Rate column, which identifies how badly each firm failed in regard to their professional obligations
|
Firm Name |
No. of Late
Disclosures |
Failure Rate
in Examined Areas |
Total
Violations |
|
Merrill Lynch, Pierce, Fenner & Smith, Inc. |
1,420 |
30% |
4,733 |
|
American Express Financial Advisors, Inc. |
770 |
44% |
1,750 |
|
Wachovia Securities LLC |
610 |
32% |
1,906 |
|
Prudential Equity Group, LLC |
490 |
27% |
1,815 |
|
LINSCO/Private Ledger Corp. |
390 |
71% |
549 |
|
PFS Investments, Inc. |
390 |
64% |
609 |
|
Raymond James Financial Services, Inc. |
350 |
60% |
583 |
|
Metropolitan Life Insurance Co. |
340 |
62% |
629 |
|
NYLife Securities, Inc. |
350 |
45% |
778 |
|
WM Financial Services, Inc. |
270 |
55% |
491 |
|
Edward Jones & Co., LP |
280 |
27% |
1,037 |
|
Chase Investment Services Corp. |
230 |
25% |
920 |
|
AXA Advisors, LLC |
210 |
31% |
677 |
|
MML Investor Services, Inc. |
220 |
69% |
319 |
|
Banc of America Investment Services, Inc. |
170 |
56% |
304 |
|
ING Financial Partners, Inc. |
160 |
77% |
208 |
|
New England Securities |
180 |
57% |
316 |
|
J.P. Turner & Company, L.L.C. |
140 |
62% |
226 |
|
Financial Network Investment Corp. |
130 |
74% |
176 |
|
Allstate Financial Services, LLC |
130 |
44% |
295 |
|
RBC Dain Rauscher, Inc. |
140 |
35% |
400 |
|
Wells Fargo Investments, LLC |
140 |
35% |
400 |
|
World Group Securities, Inc. |
140 |
61% |
230 |
|
Farmers Financial Solutions, LLC |
100 |
66% |
152 |
|
InterSecurities, Inc. |
120 |
41% |
293 |
|
Jefferson Pilot Securities Corporation |
110 |
48% |
229 |
|
J.J.B. Hilliard, W.L. Lyons, Inc. |
120 |
62% |
193 |
|
Quick & Reilly, Inc. |
120 |
51% |
235 |
|
SunAmerica Securities, Inc. |
95 |
33% |
288 |
|