Massachusetts securities regulators are considering changing their licensing practices after completing a review last year of brokerages with a high proportion of brokers with troubled histories.
“The evidence is pretty overwhelming that there is a practice here - a history here - of people moving from one firm to another and re-offending,” Massachusetts Secretary of the Commonwealth William Galvin told Reuters. “We can’t simply stand by and say, ‘The companies will do a better job.’ They won’t do a better job unless they feel some incentive.”
Some former regulators contacted by Reuters agreed with FINRA’s policy of withholding its internal risk ratings of firms from the public.
Susan Merrill - former head of enforcement at FINRA and now a partner with the law firm Sidley Austin LLP - said that releasing such ratings would be unfair to firms who have not necessarily broken laws or regulations.
“If there is a finding by the regulator,” Merrill said, “then that’s fair game.”
FINRA’s former CEO, Richard Ketchum, told Reuters last June that the regulator was considering publicly disclosing more information about firms with high concentrations of problematic brokers.
“We are looking hard at questions about how we can appropriately and fairly provide that broader disclosure ... when firms have concentrations of persons that have similar problems,” Ketchum said in an interview.
Cook said Monday that FINRA was considering additional measures to rein in high-risk brokers, but he didn’t go into specifics.
Wolves Of Wall Street
Many of the 48 firms identified by Reuters regularly cold-call customers on the phone with high-pressure sales pitches, according to regulatory complaints and sanctions against the firms and their brokers.