Research into "How Widespread and Predictable is Stock Broker Misconduct?" by SLCG indicates that prior customer complaints against individual brokers can indicate future complaints. McCann, Qin, and Yan discovered that including co-worker complaint histories significantly improves the ability to predict complaints against brokers who have not been previously complained about. They also found that customer complaints that were denied - not only settlements and awards - are useful in predicting future investor harm.

In their study, Egan, Matvos, and Seru confirm that the regulatory and labor market mechanisms do not effectively filter out poor brokers from the industry. Instead, they steer these brokers over time towards brokerage firms that employ individuals with a disproportionately high incidence of customer complaints. These firms are characterized by lax hiring practices and relaxed compliance ethics, targeting less sophisticated investors.

According to Dimmock et al. [2016], in a related investigation, financial fraud exhibits a contagious nature. Their findings indicate that a broker's likelihood of perpetrating financial fraud is strongly influenced by the propensity of their colleagues to commit fraud, independent of factors such as firm culture, branch atmosphere, market conditions, and state regulatory policies.

Rebecca Sarah Raffs current employer, is one of the 30 highest risk brokerage firms measured by the percent of brokers at the firm who have customer complaints disclosed on their BrokerCheck reports. 14.08% of 's brokers have customer complaints compared to only 2.71% of all brokers who have complaints.

If you have questions about this post, about and/or Rebecca Sarah Raff or about the management of your accounts, please contact SLCG for an initial consultation or email us at BrokerInquiry@SLCG.com.

SLCG Economic Consulting, LLC

For nearly 25 years, SLCG Economic Consulting, LLC ("SLCG") has provided consulting services to individuals, corporations and state and federal agencies mostly related to finance and economics. SLCG professionals include professionals with substantial academic and government experiences who conduct ongoing publishable research.

SLCG is a wholly owned subsidiary of McCann Yan Holdings, Inc., a Virginia incorporated company based in Northern Virginia.