Bad brokers don't leave the business; they just move on to a different firm.

That is one of the key findings of a study of broker misconduct by professors at the business schools of the University of Chicago and University of Minnesota. The study, titled "The Market for Financial Adviser Misconduct," reviewed broker disciplinary records from 2005 to 2015 stored in the Financial Industry Regulatory Authority's BrokerCheck database, covering almost 4,000 securities firms employing about 640,000 brokers.

There is an enormous wealth of information that is publicly available about brokers who violate the suitability rules and other standards of conduct. What the study found was that misconduct that resulted in disciplinary action was widespread, with one in 13 brokers having a misconduct-related disclosure in their Finra files.

There is no other way to put this: That's just astonishing. To their credit, many brokerages try to take appropriate action. As Bloomberg News reported yesterday, “Misconduct isn't left unchecked by financial firms. About half of advisers found to have committed misconduct are fired.”

My colleague Michael Batnick plowed through the 60-page report to pull more data from the study. He found that:

* About a third of brokers with misconduct records are repeat offenders.

* Past offenders are five times more likely to engage in misconduct than the average advisor, even compared with other advisers in the same firm at the same point in time.

* Brokers working for firms whose executives and officers have records of misconduct are more than twice as likely to engage in misconduct.

* Almost half of the brokers who engage in misconduct in a given year don't keep their jobs into the next year. However, almost half of the brokers (44 percent) who lost their jobs due to misconduct found employment in the industry within a year.

* Among currently registered brokers, 7.56 percent engaged in misconduct at least once. Of those, 38 percent are repeat offenders.

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