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March 7, 2014

Stockbrokers Fail to Disclose Red Flag

“In less than two years, stockbroker Marcos D. Leiva racked up a personal bankruptcy, a tax lien, a court judgment for unpaid debt and a criminal guilty plea relating to a false report to law enforcement.”

“Each should have been promptly disclosed to investors. None was.”

“Mr. Leiva is one of more than 1,600 stockbrokers whose records failed to disclose bankruptcy filings, criminal charges or other red flags in violation of regulations, without regulators noticing, according to a Wall Street Journal analysis.”

“These same brokers have also accumulated more disciplinary actions by regulators and complaints from clients, on average, than other brokers, the Journal’s analysis of hundreds of thousands of stockbroker records shows.”

“The findings reveal a significant hole in regulation of the brokerage business. Brokers’ records are something investors expect to be able to learn before entrusting money. In Mr. Leiva’s case, a 75-year-old client claimed he lost most of his life savings through the broker’s actions, recovering only a fraction.”

“Mr. Leiva, who was working on New York’s Long Island, couldn’t be reached for comment”


Read full Wall Street Journal article here.

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