“With the stock market in the doldrums, plenty of investors are griping about their brokers. But some firms get more complaints than others,” writes Ruth Simon in today’s Wall Street Journal.

“Prudential Securities, a unit of Prudential Financial Inc., produced the worst track record when it comes to investor abuses, while Fidelity Investments had the fewest investor-related problems, according to a study to be released Tuesday by Weiss Ratings Inc. of Palm Beach Gardens, Fla. The Weiss study examined arbitration awards and regulatory and legal actions recorded by the National Association of Securities Dealers for the 18 top retail brokerage firms between 1997 and 2001.”

” ‘There is a very big difference from firm to firm regarding the risks you face as an investor,’ said Martin D. Weiss, chairman of Weiss Ratings, which issues safety ratings for brokerage firms, insurers and other financial institutions. Though investors are often advised to avoid ‘small, fly-by-night’ brokerage firms, he added, ‘size is no assurance of reliability and integrity.’

“Prudential, which led the list, had 72.25 investor-related actions per million customer accounts during the past five years, according to Weiss. That includes 123 arbitration awards and 35 regulatory actions. Prudential spokesman Jim Gorman says, ‘Until we’ve had a chance to review the report we can’t verify the accuracy of the data,’ adding, ‘Our internal surveys indicate our customer-service satisfaction rates are very high.’ “

“Other firms that fared poorly on the study include online broker Ameritrade Holding Corp., which had 67.11 actions per million customer accounts, and U.S. Bancorp’s U.S. Bancorp Piper Jaffray, which had 64.46 actions per million accounts. Ameritrade was the subject of 91 arbitration awards, while U.S. Bancorp Piper Jaffray had a mix of arbitration awards and regulatory actions.”

“Both Ameritrade and U.S. Bancorp declined to comment, saying they hadn’t been given an opportunity to review the study.”

“The Weiss study comes at a time when a growing number of investors are registering their disenchantment with their brokers. NASD Resolution, an arbitration forum in Washington, D.C., expects to receive a record 7,268 arbitration filings this year, based on the increase it has seen so far this year. The NASD’s arbitrators awarded roughly $40 million in damages to investors during the first quarter. That is more than 40% of the $97 million awarded in all of 2001. Awards against brokerage firms most commonly involve allegations of excessive and unauthorized trading in customer accounts, failure to supervise brokers and negligence, Mr. Weiss said.”