WALL STREET JOURNAL: …The Journal took a unique database, gathered from 21 states, of more than 500,000 stockbrokers who were still working in the industry last year and compared it with criminal and bankruptcy-court filings. This revealed more than 1,500 brokers with personal-bankruptcy filings from 2004 through 2012 that aren’t in their regulatory records, and 150 brokers whose records don’t include criminal charges or convictions that should have been reported. Brokers’ records should show personal bankruptcy petitions filed within the last 10 years.
While a bankruptcy filing in itself doesn’t suggest dishonesty, brokers who had unreported bankruptcies had worse disciplinary records than the industry norm, on average. For example, they were more than twice as likely to have been fired. About one in 33 had three or more other black marks such as customer complaints or terminations on their regulatory histories, a rate more than 65% higher than other brokers.
[The Financial Industry Regulatory Authority, a self-regulatory body commonly called Finra] requires brokers to tell their employers about any felony charges or convictions, as well as about finance-related and certain other misdemeanor charges. The scores of unreported charges uncovered by the Journal include burglary, forgery, larceny, theft, bad checks, identity theft, assault with a deadly weapon, stalking, sexual battery, false imprisonment, bail jumping and drug offenses. Firms are required to pass brokers’ disclosures along to Finra…. (more)
