In their study "How Widespread and Predictable is Stock Broker Misconduct?" researchers at SLCG discovered that past customer complaints against individual brokers can indicate the likelihood of future complaints. McCann, Qin, and Yan also found that incorporating co-workers' complaint histories notably enhances the predictive accuracy for brokers without prior complaints. Furthermore, they determined that customer complaints that were denied - beyond just settlements and awards - are valuable in forecasting potential investor harm.

Egan, Matvos and Seru's results confirm that, rather than weeding bad brokers out of the industry, the regulatory environment and labor market sifts bad brokers down the quality ladder over time into brokerage firms who employ brokers with disproportionately higher numbers of customer complaints. These high-risk brokerage firms have loose hiring practices and lax compliance ethics and specialize in preying on unsophisticated investors.

Dimmock et al. [2016], in a related research endeavor, uncover that financial fraud spreads like a contagion. They ascertain that the likelihood of a broker engaging in financial fraud is significantly affected by the predisposition of their coworkers toward fraudulent behavior, even when accounting for firm culture, branch environment, market conditions, and state regulatory frameworks.

Joseph Ralph Fenstermachers 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. 20.47% 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 Joseph Ralph Fenstermacher 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

SLCG Economic Consulting, LLC ("SLCG") provides finance, economics, and investment management consulting services. Our clientele includes law firms, banks, brokerage firms, and individuals embroiled in complex litigation, for whom we offer expert witness services. Our team consists of highly qualified professionals holding PhD and MA-level degrees, with extensive experience across academia, industry, and government. We have provided expert testimony in state and federal courts, and in arbitration forums.

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