Originally published in the Huffington Post, December 13, 2016
Oppenheimer failed to timely report more than 350 required filings to the regulatory authority.
On its website, Oppenheimer sets forth its purported goal of helping investors. Here’s what it asserts: “We strive to help individuals maximize returns through an investment approach that’s rooted in four key principles. Make global connections, look to the long term, take intelligent risks, and invest with proven teams.”
Let’s take a closer look at the “proven teams” who stand at the ready to assist you with reaching your retirement goals.
A checkered history
According to a comprehensive study by the Securities Litigation and Consulting Group (SLCG), the “team” at Oppenheimer consists of 2,217 registered brokers. 276 of these brokers (12.45%) had “investor harm” events in their background. “Investor harm” is defined as an award or settlement in excess of a threshold amount. Of this group, 92 (4.15%) were previously fired by other firms and hired by Oppenheimer.
While Oppenheimer ranked #7 in the top 30 firms with 400 or more registered brokers ranked by the percentage of brokers with investor harm events as defined in a previous study, it was #1 among brokerage firms with more than 1000 registered brokers. That’s not a ranking to be proud of.
This data is significant because findings of a number of studies indicate the risk a broker will commit misconduct is “significantly increased” if co-workers have previously committed misconduct.
The SLCG study quantified the risk to investors of dealing with the six brokerage firms with the highest misconduct disclosures (Oppenheimer was #7 overall) in no uncertain terms, as follows: “Given their coworkers’ disclosure record as of 2014, 83.7% of the brokers at these six firms would be in the highest risk quintile as defined by Qureshi and Sokobin and should be avoided by investors.”
Clearly, this is data Oppenheimer and others in the securities are not eager for investors to learn. It appears that Oppenheimer intentionally delayed reporting events relating to misconduct by its brokers in order to keep that information from the prying eyes of the investing public.
According to a News Release dated November 17, 2016 issued by the Financial Industry Regulatory Authority, over a multi-year period, Oppenheimer failed to timely report more than 350 required filings to the regulatory authority. These filings included “actions taken by Oppenheimer against its employees, and settlements of securities-related arbitration and litigation claims.”
The delay in reporting these claims was not minor. On average, according to the Release, “Oppenheimer made these filings more than four years late.”
The Release also noted other misconduct by Oppenheimer, including failing to produce documents in discovery to customers who filed arbitrations, and for not applying applicable sales charge waivers to customers.
FINRA fined Oppenheimer $1.575 million and ordered it to pay $1.85 million to customers. As is typical, Oppenheimer “ neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.”
In its annual report for 2015, Albert G. Lowenthal, the Chairman and CEO of Oppenheimer, stated: “As we stay true to our principles, always doing what is right and best for our clients in the best and worst of times, we can feel justly proud of our efforts.”
Clients and prospective clients of Oppenheimer need to ask themselves whether these lofty statements have a hollow ring.