Research Your Broker As You Would A Stock

To protect your investments, before working with a broker or other financial professional, make sure that person is licensed as a registered investment adviser.

Investing some time and effort in researching your stockbroker — just as you would if he or she were a security — can pay dividends.

That’s the word from experts who say before working with a broker or other financial professional, make sure that person is licensed to sell you an investment. One way to do this is by using a free online tool from the Financial Industry Regulatory Authority (FINRA) called BrokerCheck.

To use the online tool, go to FINRA BrokerCheck. You can look up a specific firm or investment professional. You can also search by zip code.

When researching individuals, the tool can be used to find:
• employment history;
• approved licenses, registrations, and qualification exams passed;
• certain misdemeanor charges and convictions; and
• disciplinary actions and sanctions imposed by FINRA, the SEC or other regulators.

When researching a firm, the tool can be used to find:
• its address, legal status and types of business it engages in;
• a 10-year history of all felony charges and convictions, and certain misdemeanor charges and convictions;
• disciplinary actions and proceedings initiated by regulators; and
• bankruptcy proceedings and arbitration award information.

Even if an individual or firm does not have a history of reported problems, the tool can help detect potential red flags. For example, you can see if an individual broker has switched firms frequently over a short period of time, or if the firm has changed its name often.

“The first step any investor should take before he or she does business is to use BrokerCheck to do a background search,” said Gerri Walsh, president of FINRA Investor Education Foundation. “Make sure the investment professional is licensed either with FINRA as a registered representative or with the SEC or a state regulator as a registered investment adviser.”

It’s also a good idea to check with your state securities regulator, local consumer groups or others who have business relationships with a particular financial professional.
FINRA is the largest independent regulator for all securities firms doing business in the United States.

For more resources, visit FINRA’s website.

 

Stacy Anthony

About Stacy Anthony

Director of Marketing|St. George Village
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