A sweep of over 240 broker-dealers in Massachusetts yields some revealing information on misconduct and supervision

Massachusetts securities regulators released the findings of their June sweep of some 240 broker-dealers and they weren’t positive.  According to Commonwealth Secretary William Galvin, a “higher than average” number of advisors have disciplinary incidents on their records. Galvin also reported that few registered reps with such records have been placed on heightened supervision by their firms.

Here are the high-level findings from the sweep:

1.  All B/Ds conduct background checks.

2.  95% of B/Ds have written policies related to hiring agents with current disclosure incidents.

3.  18% of reps hired by the firms in the study have a record of misconduct.

4.  In the past 2 years, an increasing percentage of reps were hired with misconduct records.

5.  At some firms more than 20% of their reps have misconduct records.

6.  Only 6% of total hires with disclosures were placed on heightened supervision

7.  In the past 2 years, an increasing percentage of reps hired with disclosure incidents were been placed on heightened supervision.

8.  Overall, a very small percentage of reps with misconduct records are subject to increased supervision.