You are about to entrust a broker and a brokerage firm with a substantial amount of your money. Have you checked them out first?
There are three sources for you to check. First is the Financial Industry Regulatory Authority (FINRA); this is the organization that regulates brokerage firms and their employees. To see the information FINRA makes available on brokers and brokerage firms go to www.finra.org. Once on the website click FINRA BrokerCheck.
You should also check with your state regulator. Some state securities departments provide more information than does FINRA. The North American Securities Administrators Association (NASAA) has on its website, www.nasaa.org, a link for the appropriate regulator in each state. (NOTE: Brokers and brokerage firms are required to be licensed in the state in which they are doing business.)
The report you will receive from these two sources will show the licenses your broker holds; the brokerage firms they have been associated with and the length of time employed there; and any investor complaints brought against this broker. Wouldn’t it be helpful to know if your broker has been at four firms in the last five years, or that one customer (or more) has alleged that the broker committed unauthorized trades or purchased unsuitable investments? The report will also show if the broker was terminated by a brokerage firm or subject to “heightened supervision” which is a polite way of saying the broker may be trouble and the firm has been required to keep a close eye on him. The report will also show if any outside regulators, such as the SEC, FINRA or state regulators, have ever investigated the broker. You will also see other information that may be of importance, such as if your broker filed for bankruptcy protection or was subject of a tax lien.
Finally, to see if your broker is covered by SIPC (Securities Investor Protection Corp.) insurance, go to www.sipc.org.
Page Perry is an Atlanta-based law firm with over 125 years collective experience representing investors in securities-related litigation and arbitration. While past results are not indicative of future success, Page Perry’s attorneys have recovered over $1,000,000 for clients on more than 30 occasions. Page Perry’s attorneys are actively involved in advising individual and institutional investors regarding their investment problems. For further information, please contact us.