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.

According to Egan, Matvos, and Seru, the regulatory landscape and job market do not effectively remove subpar brokers from the industry but rather direct them over time to firms that employ brokers with significantly more customer complaints. These brokerage firms, characterized by lenient hiring practices and minimal compliance standards, focus on targeting less knowledgeable investors.

In their related study, Dimmock et al. [2016] establish that financial fraud spreads contagiously. They find that a broker's inclination to commit financial fraud is significantly shaped by the tendency of their coworkers to engage in fraudulent activities, even when accounting for firm culture, branch dynamics, market conditions, and state regulatory frameworks.

Clayton Lee Elliss 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. 15.51% 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 Clayton Lee Ellis 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.