Speaking at the at the Financial Service Institute's 2006 Broker-Dealer Conference in San Diego, Securities and Exchange Commissioner Cynthia Glassman said that brokerages were the focus of more investor complaints to the SEC in the 2005 fiscal year than any other type of business.

For the year ended Sept. 30, about 31 percent of all complaints lodged with the SEC concerned brokerages. There were fewer complaints about corporations, mutual fund companies, investment advisors and transfer agents, she said. In most cases, she said, brokerages could avoid complaints by spending more time and effort educating investors.

The most frequent complaints involved "transfer of account problems," such as an investor who has switched brokerages being unable to transfer a proprietary fund from the old brokerage into a new account, she said.

Close behind were complaints about unauthorized transactions, problems with closing accounts, unsuitable investment recommendations, and errors and omissions in account statements."In reviewing our enforcement actions initiated and the most frequent complaints received in the past year, what quickly becomes obvious is that, in many situations, the number of enforcement actions or complaints could have been drastically reduced had the brokers taken more time to educate their customers and keep them informed through clear disclosure and communications," Glassman said.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access