According to reports, Craig McCann, owner of Securities Litigation and Consulting Group (SLCG), and a noted FINRA expert witness, reported on LinkedIn that FINRA data has found that bad brokers concentrate in bad brokerage firms.
Using FINRA measures of investor harm and misconduct at firms with more than 100 brokers, small brokerages were found to have more bad actors than large firms, McCann concluded.
Of the 42 firms with the worst records, McCann further stated that 32 had fewer than 400 brokers and only Oppenheimer & Co. had more than 1,000. Of the 10 worst firms, eight had fewer than 400 brokers.
McCann also warns that the concentrations of bad brokers helps predict future misconduct by co-workers not yet revealed to be bad.
Although McCann does not appear to draw any conclusions as to why bad brokers concentrate at smaller firms, The White Law Group’s experience is that smaller firms do not have the same compliance resources and therefore fail to identify problems as early as larger firms.
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