McMahon and others at National Securities Corporation, for instance, bought or sold between 200 and 900 shares of Apple stock for Haus nine times in about a year – racking up $27,000 in fees, according to a 2015 complaint Haus filed with the Financial Industry Regulatory Authority (FINRA).
Haus alerted the regulator to what he called improper “churning” of his account to harvest excessive fees. But the allegation could hardly have come as a surprise to FINRA, the industry’s self-regulating body, which is charged by Congress with protecting investors from unscrupulous brokers.
FINRA has fined National at least 25 times since 2000. As of earlier this year, 35 percent of National’s 714 brokers had a history of regulatory run-ins, legal disputes or personal financial difficulties that FINRA requires brokers to disclose to investors, according to a Reuters analysis of FINRA data.
Concentrated risk FINRA, the primary regulator of U.S. brokerages, requires brokers to disclose incidents in their past that might give investors concern. Reuters analyzed the most serious of those incidents to identify firms with high concentrations of brokers with such FINRA flags, which include regulatory sanctions, civil judgments, personal bankruptcies and broker terminations after allegations of misconduct. At least 30 percent of brokers at the 48 firms listed below have a history of such FINRA-mandated disclosures. <more>
* FINRA flags are incidents that the Financial Industry Regulatory Authority requires brokers to publicly disclose. For definitions of the flags Reuters used in its analysis, click here. Source: Reuters analysis of FINRA data