Investor Complaints and Questions

Substantial Rise in Investor Contacts

During fiscal year 2002 (October 1, 2001 to September 30, 2002), the SEC's investor assistance staff received 82,337 complaints and questions, a 17% increase compared with FY 2001. Nearly 44% of these contacts came in electronically through our online investor complaint form or email, a 5-point increase over last year. Approximately 36% of our investor contacts involved telephone calls, and the remainder included letters, faxes, and personal visits.

SEC Total Investor Contacts by Fiscal Year

*Other contacts includes repeat contacts, contacts with insufficient information to process, and contacts not within our jurisdiction.

The overall number of investor contacts has increased by almost 71% over the past 5 years.

Complaint Trends

The SEC received 21,613 complaints during FY 2002, compared with 20,435 in FY 2001. Approximately 44% of these complaints-a total of 9,452-involved broker-dealers. In a year when overall complaints increased by nearly 6%, complaints against broker-dealers fell by almost 3%.

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During FY 2002, complaints concerning administrative and other fees became our number one complaint, having increased by approximately 40% over 2001. While complaints in most categories generally declined, complaints concerning unsuitable recommendations and failure to follow instructions rose by 16% and 37%, respectively. In addition, poor investment advice and problems with account liquidations replaced margin position sellouts and errors in processing orders as this year's leading complaint types.

The ten most common complaints against broker-dealers included:

Approximately 20% of all broker-dealer complaints received during the year concerned online brokerage firms, compared with 24% last year. Complaints against online broker-dealers fell to 1867 during FY 2002, down almost 20% from the 2,320 we received in FY 2001 and down more than 55% from an all-time high of 4,258 in FY 2000. The top five types of online broker-dealer complaints for FY 2002 included: