Warren’s questions were pointed, but for good reason: During the hearing she brought up a new study, from the University of Chicago’s Booth School of Business and the University of Minnesota, that found misconduct to be alarmingly frequent among financial advisors. The study, which used FINRA’s database to look at disclosures indicative of fraud and wrongdoing at nearly 4,000 securities firms, is the first large-scale evaluation of the industry’s behavior. It looked at the records of 1.2 million financial advisors working between 2005 and 2015, and found that one in 13 were flagged for misconduct. More worryingly, although half of those advisors were fired as a result, 44 percent were reemployed within a year.

The study also found that misconduct was concentrated among firms with certain types of customers: “Our results suggest that misconduct is widespread in regions with relatively high incomes, low education, and elderly populations. These results suggest that firms that specialize in misconduct with several unscrupulous financial advisors are likely targeting vulnerable consumers, while other firms use their reputation to attract sophisticated consumers,” the study’s authors wrote.

The study Warren cited also compiled a list of firms where misconduct was highest. Topping the list was Oppenheimer & Co. where nearly 20 percent of advisors have misconduct records, followed by First Allied Securities and Wells Fargo Advisors. Firms with the lowest misconduct rates were Morgan Stanley and Goldman Sachs—where less than 1 percent of advisors had been disciplined for misconduct.

Ketchum, who is retiring later this year, told Warren he agreed that the study’s results were “dismaying,” and that it’s curious that firms continue to hire people with such records of misconduct. That said, he pointed to the fact that FINRA suspends and bars roughly 1,000 people a year for misconduct and keeps tabs on high-risk advisors, but Warren seemed unsatisfied with his answer. Near the end of her questioning, she pressed Ketchum on what FINRA plans to do beyond its current efforts: “You obviously are not getting them out of the industry. They’re still there, and they’re there in big numbers, and they’re concentrated in places where they are most likely to encounter unsophisticated consumers. And I think that’s a real problem we’ve got.”

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