Long Island, New York, has historically been a haven for boiler-room brokerages, which inspired the movie, “The Wolf of Wall Street,” based on the true story of broker Jordan Belfort and his firm, Stratton Oakmont. Belfort pleaded guilty to securities fraud and money laundering in 1999.
FINRA warned in a news release last year that boiler-room tactics were on the rise, particularly those targeting the elderly and other vulnerable investors.
Brokers generally know which firms will hire them despite past sanctions, said Dean Jeske, a lawyer at Foley & Lardner and FINRA’s former deputy regional chief counsel for enforcement in the Midwest.
“When you get a mark on your (record), it’s hard to get a job at Morgan Stanley or Merrill Lynch,” Jeske said.
Mike McMahon has had little trouble landing jobs at brokerages despite a trail of allegations and settlements.
McMahon left National in 2014 and later joined a smaller firm, Long Island-based Worden Capital Management - where 43 percent of 79 brokers had a history of FINRA flags as of earlier this year.
Forty-one percent of the firm’s brokers had at some point in their careers worked at firms that were later expelled by FINRA, according to the Reuters analysis.
Jamie Worden, head of Worden Capital, said in a statement that his firm’s compliance team vets all prospective brokers and that FINRA-mandated disclosures do not necessarily indicate wrongdoing.
“The public disclosures only represent a sliver of the information surrounding any circumstance,” Worden said.
McMahon, National and another firm where he worked have agreed to pay a total of $1.35 million since 2007 to settle 10 separate client complaints involving McMahon, according to McMahon’s record on FINRA’s BrokerCheck website.