It’s hard to believe, but some brokerage firms specialize in hiring recidivist brokers — those with 3, 4, 5 and even more customer-related disciplinary infractions on their record. These “predator wolf-pack” firms populated with recidivist brokers have a business model that maximizes profits by targeting and ripping off unsuspecting, vulnerable and often elderly investors, breaking FINRA and other rules along the way.
It’s even harder to believe that the SEC and FINRA, the self-regulatory organization through which the industry is supposed to police itself, haven’t revoked the licenses of these firms, expelled and barred them from the industry. Frankly, we don’t understand why the many good brokers who abide by the law haven’t demanded, in their own self-interest, that these wolf-pack firms be shut down for hurting the reputation and standing of the brokerage industry.
After knowing for years about these firms and the real harm they cause investors, FINRA is finally proposing a rule to do something about them. However, FINRA is proposing a convoluted, Rube Goldberg-type process that, while it may make it little costlier for these firms to operate, would still allow them to remain profitable and continue pursuing their schemes of customer abuse. This is grossly insufficient.
Better Markets filed this comment letter with FINRA detailing why their proposal is so inadequate and what they must do to achieve their indispensable mission of protecting investors and promoting market integrity. This is just the beginning of Better Markets’ advocacy to try to get FINRA and the SEC to do what should have been done a long time ago: put protecting investors before protecting industry profits.