Financial “Adviser Misconduct Exists at Unacceptably High Levels”

To those familiar with the shenanigans we deal with on a daily basis in the financial industry, it comes as no surprise and as a refreshing breeze to read Senators Warren and Cotton’s letter to the Chairman and CEO of FINRA, Richard Ketchum. It is an open secret that many stock brokers and brokerage firms do not adhere to high standards of conduct when it comes to handling your hard-earned investment dollars. Yes, the large majority of financial professionals are doing their best and giving investment advice that is related to their clients’ investment objectives and risk tolerance. But that is little comfort to the significant minority of investors who have lost all or a portion of their retirement funds at the hands of brokers and brokerage firms that are not paying attention and are negligent (or worse) with their financial investment advice. As the senators point out, FINRA professes to the public that they work “every day to ensure that…every investor receives the basic protections they deserve.” Importantly, based on the statistics, FINRA could be doing a better job to protect your investment assets. The report cited in Senators Warren and Cotton’s letter (see link below) to FINRA shows that “one in thirteen financial advisers have a misconduct-related disclosure on their record.” One in thirteen out of the roughly of the 641,000 brokers that FINRA says are registered with them have misconduct disclosures on their public records. The misconduct ranges from those charged with bribery, forgery, extortion, or fraud, or who were fired or ‘permitted to resign’ based on allegations of fraud or investment law violations. Wow. FINRA clearly has a responsibility to step up and address these rampant issues to protect your investments. But additionally, I would suggest that investors need to do more than simply file away an unopened envelope with their monthly statements. Be vigilant about reviewing your statements to ask questions that come to mind when you review your statements and see over-concentration, or frequent trading that you did not know about and/or want, don’t sign account forms or ‘happy letters’ without reviewing and/or making changes. And if you see something, say something, to borrow a phrase. If you alert the broker’s manager about the issue you may be able to save your investments even if your broker is not doing his or her job. Don’t be afraid to hold your broker and brokerage firm to task. Ask questions. If you have losses, seek an experience securities fraud lawyer to review your situation. You’ll be glad you did.

to read the full letter, cut and paste the following link into our browser: https://www.warren.senate.gov/?p=press_release&id=1127