Unscrupulous Stockbrokers

Re “Still More Lumps for ‘Rogue’ Brokers,” editorial, Sept. 10:

In my experience, management culture, not “rogue” brokers, is the major problem for stock investors. In two years the major firm handling my IRA-rollover never sent me an error-free monthly statement. They over-reported my initial rollover amount to the IRS, took substantial amounts out of IRA tax-protection status, contrary to written instructions, and stonewalled my pleas for corrections. In addition, the office manager admonished my broker because I invested in outside mutual funds rather than inferior in-house products.

The broker is essentially helpless against coercion by incompetent or greedy management. Management can put accusations into the broker’s U-4 report in the Central Registration Depository at will. As reputable firms do look closely at a broker’s report before offering employment, vindictive management can easily wreck an honest broker’s career.

Brokers do not act alone. They work for the brokerage firm. Reputable firms can and do closely monitor broker activities. When something goes wrong, we need to look more at the firm than at the individual broker.

THOMAS H. MOORE

Santa Ana

If an investor wants to risk transferring funds from safe, low-yield accounts to higher yield stock funds, let him also bear the risk of running into a “bad apple” broker as well. The SEC will no doubt need more funds to observe and police every agent or broker in the business. As a taxpayer who keeps his savings under his mattress, I don’t want to subsidize a program to reduce the risk and increase the yield of an investor in the stock market. Let the buyer beware! That’s part of the risk.

ANDREW TILLES

Los Angeles