Massachusetts’ top securities regulator is looking for information from brokerage firms to keep “rogue” brokers out of the Bay State.
Reuters reports that Commonwealth Secretary William Galvin has sent letters to 241 unnamed firms in which more than 15% of their current representatives have at least one current disclosure incident on their records.
"This exceeds the average percentage found among all Massachusetts-registered broker-dealers," Galvin said in a news release. Disclosure incidents can involve allegations from disputes headed for arbitration to illegal conduct, according to the report.
Earlier this year a study titled “The Market for Financial Adviser Misconduct,” claimed that roughly 7% of advisers have misconduct records — and that prior offenders are five times as likely to engage in new misconduct as the average financial adviser. Moreover, while approximately half of financial advisers lose their jobs after their misconduct, 44% of these advisors are reemployed in the financial services industry within a year, according to the report.
Galvin sent letters asking the undisclosed broker-dealer firms for hiring information dating back to Jan. 1, 2014. His office is looking for the number of representatives terminated or placed on heightened supervision during that period.
The firms have until June 20 to respond.
