The Market for Financial Adviser Misconduct—Study Focusing on Broker Misconduct

New Working Paper, “The Market for Financial Misconduct”, by U. of Chicago and U. of Minnesota Profs Reveals that 7% of Financial Advisers Disciplined for Misconduct and Prior Broker Offenders Five Times More Likely to Engage in New Misconduct than Average Financial Adviser

Imagine that you are an average American. You work hard, you support your family, and you are finally ready to start investing the extra dollars you have been making and putting in the bank. You look for what you believe is to be a reputable brokerage house.  You might assume you can trust your local broker. Your assumption might cost you dearly.

A new paper, The Market for Financial Misconduct (MFM), penned by business school professors at the University of Chicago and University of Minnesota reveals that 7 percent of financial advisers have been disciplined for misconduct that ranges from putting clients in unsuitable investments to trading on client accounts without permission.

Regarding the aforementioned advisors, 44% are reemployed in the financial services industry within a year, according to the MFM Report.

Firms that Persistently Engage in Misconduct Coexist with Firms that Have Clean Record, e.g.. Nearly 20 percent of Financial Advisers at Oppenheimer & Co., with More than 2,000 Advisers Counted in the Study, have Misconduct Records, According to the New paper

The Market for Financial Misconduct continues to report that firms that persistently engage in misconduct coexist with firms that have clean record.

Furthermore, said report shows that the differentials in consumer sophistication may be the culprit for this phenomenon: misconduct is concentrated in firms with retail customers and in counties with low education, elderly populations, and high incomes, and the findings show that some firms “specialize” in misconduct and even go so far as to target unsophisticated consumers.

Finally, the study provides data on individual brokerages, and one shining concrete example is that nearly 20 percent of financial advisers at Oppenheimer & Co., with more than 2,000 advisers counted in the study, have misconduct records.

The Peiffer Rosca Wolf Securities Lawyers Often Assist Investors

The Peiffer Rosca Wolf securities lawyers assist investors who lose money as a result of broker misconduct. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.

Investors who believe they lost money as a result of broker misconduct are encouraged to contact the securities lawyers at Peiffer Rosca Wolf, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.

Alan Rosca (1206 Posts)

Alan is a securities lawyer. He also teaches Securities Regulation at the Cleveland-Marshall College of Law. He focuses his legal practice on complex commercial and financial litigation and arbitration, particularly in the areas of securities and investment fraud. His office is in Cleveland, Ohio.


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