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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
 
 
For further information, contact Louis P. Stanasolovich, CFP  ä at (412) 635-9210 or e-mail him at legend@legend-financial.com
 
 


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