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Wall Street Roundup

Study: Complaints to brokers ignored

September 25, 2007|From Times Wire Services

A Wall Street regulatory body has been too quick to let brokers wipe their records clean of customer complaints, and in many cases made allegations disappear without a hearing, an organization of lawyers who represent individual investors said Monday.

Arbitration panels convened by the Financial Industry Regulatory Authority approved brokers' requests to wipe out 98% of customer complaints, according to a study by the Public Investors Arbitration Bar Assn. The association's members represent individual investors.

Moreover, 71% of complaints addressed through so-called stipulated awards were expunged without a hearing into the matter, the study found.

"Complaints are being wiped off without arbitrators holding any hearings on the merits. That is a huge problem if you're a customer . . . looking for any record of problems," said Steven Caruso, president of the arbitration lawyers group.

The brokerage watchdog, created this year by the merger of the former regulatory arms of the National Assn. of Securities Dealers and the New York Stock Exchange, maintains a database of customer allegations such as unauthorized trading or steering customers into inappropriate investments. The data help customers and brokerages steer clear of bad brokers.

The agency didn't dispute the study's findings but said recommendations to expunge complaints had fallen by more than a third last year.

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