The New York Stock Exchange is investigating producing branch managers in the wake of a case alleging millions in misappropriations from clients by a Lehman Brothers broker, according to a report from Registered Rep.

It reports that the NYSE is conducting a survey of dealers to find out how they monitor brokers who also manage branch offices, according to brokers and branch managers from several major firms around the country.

RR says that the NYSE sent a questionnaire to branch managers across the country asking about “procedures when branch managers serve as producing brokers, and how the managers are supervised.”

The survey comes on the heels of the case involving a producing branch manager from the Cleveland office of Lehman, Frank Gruttadauria, who is accused of inflating clients accounts by about US$275 million. Accusations by the SEC extend back to Gruttadauria’s days with SG Cowen Securities Corp., too.

“This brings to the forefront the delicate situation of a producing broker functioning as a branch manager,” a Prudential Securities broker tells RR. “There are conflicts. It’s not always a good situation.”