Troubled brokers often cluster in communities with lots of elderly investors, a Wall Street Journal investigation of these ‘hot spots’ found.But bad apples can be found anywhere, making it important for investors across the country to check out any financial adviser they are thinking of hiring.
The Financial Industry Regulatory Authority, the self-regulator for the securities industry, has a free search tool investors can use to look up a broker’s background. It’s called BrokerCheck and is found through the regulator’s website, finra.org. Information on BrokerCheck is culled from filings by regulators, brokerage firms and individuals to the securities industry’s Central Registration Depository.
Using BrokerCheck, an investor can do a background check that includes a broker’s current license status, license history and employment history—as well as any reported regulatory proceedings, customer disputes and settlements. According to Finra, the database includes 1.3 million current and former registered brokers and 21,000 current and former registered brokerage firms.
There is also a BrokerCheck hotline, 800 289-9999.Information on investor complaints can also be found through state securities regulators. The website of the North American Securities Administrators Association includes a state-by-state list of those regulators with links to their websites. Securities-firm brokers are only one type of financial adviser these days. There are also registered investment advisers. Some individuals provide advice as RIAs while also selling securities as brokers.
You can also use BrokerCheck to look up information about RIAs. It takes information from the Securities and Exchange Commission’s public disclosure database on some 441,000 current and former advisers and 45,700 firms. Through BrokerCheck or the SEC’s website you can see the information on Form ADV, which firms have to file to disclose information about their business practices, fees, conflicts and disciplinary history.Some smaller registered investment advisers are regulated by state securities regulators.
via How to Check a Broker’s Background – Total Return – WSJ.