Prudential Securities, Ameritrade and U.S. Bancorp Piper Jaffray Have Worst Record of Investor Abuses over Last 5 Years According to Weiss Ratings
PALM BEACH GARDENS, Fla.--(BUSINESS WIRE)--May 14, 2002--
Fidelity, Credit Suisse, and Edward D. Jones Have the Lowest Rate
of Abuses of Top Firms
Of the nation's 18 most prominent retail brokerage firms,
Prudential Securities, Ameritrade, and U.S. Bancorp Piper Jaffray
recorded the worst record of investor abuses over the five years
ending 2001, according to an analysis by Weiss Ratings, Inc., the
nation's only provider of brokerage firm ratings.
Fidelity Brokerage Services, Credit Suisse First Boston, and
Edward D. Jones & Co. had the best record of the top firms, with the
lowest rate of abuses per customer account.
Weiss analyzed the 13,232 arbitration cases and regulatory and
legal actions recorded by the National Association of Securities
Dealers (NASD) against 612 brokerage firms.
The review found that 98% of the actions against firms arise from
arbitration cases and regulatory violations, while the remaining two
percent are composed of criminal actions, civil judicial actions, and
other judgments or liens. The number of legal actions filed against
the 18 largest retail brokerage firms between 1997 and 2001 were:
Record of Abuses by Top Retail Brokerage Firms 1997-2001
Weiss Total Arbitration # per mil
Safety Cases, Regulatory Customer
Brokerage Firm Rating & Legal Actions Accounts
----------------------------------------------------------------------
1. Prudential Securities, Inc. B 158 72.25
2. Ameritrade, Inc. C- 91 67.11
3. U.S. Bancorp Piper
Jaffray, Inc. B 47 64.46
4. E*Trade Securities, Inc. B+ 118 36.92
----------------------------------------------------------------------
5. Raymond James &
Associates, Inc. B+ 36 36.07
6. First Union
Securities, Inc. C 88 35.20
7. UBS Painewebber
Incorporated C+ 87 34.80
8. A G Edwards, Inc. A- 103 31.21
----------------------------------------------------------------------
9. Salomon Smith Barney, Inc. C 204 30.71
10. Morgan Stanley Dean
Witter & Co. B- 151 27.96
11. Quick & Reilly, Inc. B+ 34 18.89
12. Charles Schwab & Co., Inc. B 124 16.53
----------------------------------------------------------------------
13. Merrill Lynch Pierce Fenner
& Smith C- 168 16.09
14. TD Waterhouse Investor
Services, Inc. B- 68 15.25
15. American Express Financial
Advisors B 19 9.50
16. Edward D. Jones & Co. LP B+ 38 8.09
----------------------------------------------------------------------
17. Credit Suisse First
Boston Corp. C- 20 4.96
18. Fidelity Brokerage Services
LLC B+ 43 3.74
E=Very Weak, F=Failed
"This analysis provides a solid, statistical basis for identifying
the worst offenders," commented Martin D. Weiss, Ph.D., chairman of
Weiss Ratings and author of The Ultimate Safe Money Guide. "But it's
still just the tip of the iceberg. The NASD data represent only those
actions reported on the firm's public record; it does not include the
many investor complaints that are settled before they ever reach the
NASD. It's also likely we'll see a flood of new actions in the wake of
New York Attorney General Spitzer's recent revelations."
Inability to Pay Arbitration Settlements Triggers Majority of
Brokerage Bankruptcies
In a recent review of brokerage firm failures, Weiss found that
most were caused by the firms' inability to pay arbitration
settlements awarded against them. Rather than pay up, firms often
declare bankruptcy and go out of business.
The Securities Investor Protection Corporation (SIPC) covers
losses due to failure but does not cover unpaid arbitration awards.
Weiss advises investors to look seriously at the scope and frequency
of legal actions before selecting a brokerage firm.
"Most investors focus too much on finding the broker with the
cheapest commissions, but our study brings home the importance of the
firm's integrity," added Dr. Weiss. "There are two risks of doing
business with abusive firms: the risk of fraud or deceit, and the risk
of failure when a firm is slapped with large legal costs and
judgments."
Investors can learn about the professional background, business
practices and conduct of NASD member firms by visiting the NASD
Regulation website at www.nasdr.com.
A company-by-company analysis of this information is also provided
in Weiss Ratings' Guide to Brokerage Firms, available at many public
libraries. As a service to investors, Weiss now includes statistics on
arbitration cases and regulatory and legal actions taken against all
of the institutional, full-service, discount, and online brokerage
firms that it rates.
Notable Upgrades and Downgrades
Based on its latest quarterly review of 612 brokerage firms, Weiss
Ratings issued 24 upgrades and 41 downgrades. Notable upgrades
include:
-- Franklin/Templeton
Distributors Inc. San Mateo, Calif. from B- to B
-- Raymond James &
Associates Inc. St. Petersburg, Fla. from B to B+
-- Scottrade Inc. St. Louis, Mo. from B to B+
-- Ameritrade Inc. Bellevue, Neb. from C+ to C-
-- First Union
Securities Inc. Charlotte, N.C. from B- to C
-- Merrill Lynch Pierce
Fenner & Smith New York, N.Y. from C+ to C-
capitalization, leverage, earnings, liquidity and stability. The
latter category combines a series of factors including size and
growth, strength of affiliate companies and risk diversification.
In addition to evaluating a company's financial stability, Weiss
collects information on each firm's commission rates, services
offered, and branch locations.
Weiss issues safety ratings on more than 15,000 financial
institutions, including securities brokers, banks, insurers, and HMOs.
Weiss also rates the risk-adjusted performance of more than 11,000
mutual funds and more than 9,000 stocks.
Weiss Ratings is the only major rating agency that receives no
compensation from the companies it rates. Revenues are derived
strictly from sales of its products to consumers, businesses and
libraries.
Consumers needing more information on the financial safety of a
specific company can purchase a rating and summary analysis for as
little as $7.95 through the Weiss Ratings website at
www.WeissRatings.com, or starting at $15 by calling 800-289-9222.
CONTACT:
Weiss Ratings
by
Yui+Co.
Ellen Yui, 301/270-8571
ellenyui@yuico.com
or
Elizabeth Kelley Grace, 561/989-9855
lizkgrace@aol.com
SOURCE: Weiss Ratings
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05/14/2002 08:53 EASTERN |
