Survey Rates Prudential, Norwest Lowest
Prudential Securities Inc. and Norwest Investment Services were ranked the worst of the 10 largest brokerages and bank-affiliated brokerages, according to a recent investor group ranking.
The survey by the National Council of Individual Investors named A.G. Edwards Inc. in St. Louis the top brokerage and First Union Brokerage Services Inc., a unit of First Union Corp. in Charlotte, N.C., the No. 1 bank brokerage.
The group rated the largest U.S. brokerages and bank brokerages, giving high marks to the firms with the lowest commissions, the fewest disciplinary actions per broker, the lowest arbitration awards per broker and the highest returns on its investment recommendations to clients.
“Our findings really expose the fallacy of the assumption on the part of many small investors that all brokerage firms are about the same,” said Gerri Detweiler, policy director of the group, which follows small-investor issues.
Prudential Securities had the highest number of disciplinary cases per broker. It also had the highest arbitration award per broker, an average $8,138.89, according the NCII.
Most of the arbitration cases brought against Prudential resulted from the firm’s sale of limited partnerships in the 1980’s, which resulted in millions in losses for individual investors.
A Prudential spokesman said the NCII rating did not accurately reflect the firm’s current business.
The NCII tracked arbitration cases from 1989 through November of 1995, using data from the Securities Arbitration Commentator newsletter.
Edward Jones & Co. had the lowest number of arbitration cases per broker among brokerages, and the lowest average award per case at $86.60.
First Interstate Securities Inc. had one arbitration case filed against it, but no fines were imposed, the NCII reported.
Other criteria the NCII used in its rankings include commission charges and the value of the firms’ investment advice.
PaineWebber Group Inc. had the highest commissions, $177.00., but also the best stock-picking record, with a 52.38 percent gain from December 1994 to December 1995.
Among bank brokerages, First Interstate Securities charged the lowest commission, $58.75, to trade 500 shares.
The council was founded last year to improve investment information to small investors.