Based on multivariate tests, if soft dollar arrangements are present and if the firm’s investors are generally small, then fraud is more likely to occur.
When the firm serves as the custodian for client cash or securities, fraud is more likely in univariate tests. In multivariate tests, it is not significantly related to fraud.
When the firm is associated with other investment entities, fraud is more likely in univariate tests. In multivariate tests, it is not significantly related to fraud.
