In "How Widespread and Predictable is Stock Broker Misconduct?" SLCG researchers found that while individual broker past customer complaints can help identify whether a broker is likely to be subject to future complaints. McCann, Qin and Yan found that including co-worker complaint histories significantly increased the ability to predict complaints against brokers with no prior complaints. They also found that customer complaints which were denied - not just settlements and awards - are useful for predicting future 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 study, discover that financial fraud exhibits contagious behavior. They reveal that a broker's likelihood of engaging in financial fraud is notably affected by the propensity of their colleagues to commit fraud, even after adjusting for firm culture, branch environment, market conditions, and state regulatory oversight.

Brannon Lee Jolleys 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 Brannon Lee Jolley 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 almost a quarter of a century, SLCG Economic Consulting, LLC ("SLCG") has been delivering consulting services to individuals, businesses, and both state and federal agencies, primarily focusing on finance and economics. The team at SLCG comprises experts with extensive academic and governmental backgrounds who actively engage in research that is often suitable for publication.

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