What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: June 8, 2016

According to an article in yesterday’s InvestmentNews entitled “Massachusetts follows FINRA’s Lead with Crackdown on Rogue Brokers,” the state’s Securities Division launched a sweep of 241 firms with above-average numbers of broker with misconduct reports on their records. The point of the “sweep” is to learn details of broker-dealers’ hiring policies and procedures. Firms that hire brokers with checkered pasts may turn them into places that harm investors. These firms will receive stronger scrutiny from FINRA, which is stepping up its use of data to identify brokers with a record of compliance problems who keep resurfacing, and is warning firms not to rehire them. FINRA’s “firm culture” examination to evaluate brokerages was launched earlier this year.

Massachusetts requested hiring information from January 2014 to the present, including a number of brokers fired or placed on heightened supervision in that period. Firms have until June 20th to respond. The letter went to firms in which over 15% of their current reps have at least one current disclosure incident on their record, according to the statement. That number exceeds the average percentage found among all Massachusetts-registered broker-dealers, according to the statement. Disclosure events can be allegations from disputes that end up in securities arbitration to illegal conduct, according to the state’s Securities Division.

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