Stockbrokers play a critical role in both your financial present and future. You should never be in the dark about who is handling your investments and your money. FINRA makes it easy for you to research your broker, but you are the one who must be proactive and learn the information. You can start to scrutinize your broker when you know their name or their CRD number. Then, you have the online tools to learn what you need to know. If you have lost money due to broker misconduct, the attorneys at RP Legal LLC can help you file a FINRA arbitration claim.
You Need to Know Everything Possible About Your Broker
When you select a stockbroker, you are placing a tremendous amount of faith in them. The wrong broker can cause you serious financial harm. Before you trust someone with your money, you should learn as much about their history as you possibly can. Thankfully, FINRA makes it easy for you to research a broker online. Before you can perform a search, you need certain information about the broker. One way to identify a broker is through their CRD number that FINRA assigns to each registered representative.
Information About Your Broker Is Held in a Centralized Database
CRD stands for Central Registration Depository. The CRD is a database that holds certain information about brokers and their registered representatives. FINRA is tasked with maintaining this database. The intent is that this information will be easily available and searchable online. FINRA wants you to have the most possible information, so you can make an informed decision about where to do business.
Ideally, you should ask your broker for both the firm CRD number and that of the registered representative who is responsible for your account. You may have this information on printed materials. If the broker hesitates to give you their CRD number, it is already a sign that they have something to hide.
FINRA Broker Check Allows You to Research the Broker and Your Representative
Thankfully, you do not have to rely on the broker to provide you with information. If you know the broker’s name, you can search them on Broker Check to find their CRD number. You can also find a listing of brokers at each firm if you know the firm’s CRD number.
You would enter the representative’s number into Broker Check. You can learn information about each broker, including their work history and the licenses that they hold. The really important information that you must have is their complaint and disciplinary history. When a customer files a complaint against a broker, you will see it on Broker Check, regardless of the outcome of the complaint. In addition, Broker Check would also list any disciplinary actions from FINRA that the broker has faced. Federal securities law allows FINRA to punish the broker by doing the following:
- Censure
- Suspension of their licenses
- Fines
- Modifying or restricting business activities
- Requiring heightened supervisory procedures for a representative
- Barring them from the industry altogether
Broker Check would give you extensive details about any complaints filed against the broker, both in their current job or any prior employment. You would be able to see the nature of the allegations and how the broker responded to them. You would also see whether the broker was the subject of any arbitration claim, and how it was resolved.
Closely Scrutinize Your Brokers and Be Leery of a Checkered Past
You should view the registered representative’s entire history. It is better not to do business with a registered representative who has a disciplinary history, especially when they were punished for serious violations of the rules. At the very minimum, you would want to have a conversation with the broker about their history. Although the broker may explain what happened in their own words, it may not be worth the risk to hire a broker who has committed wrongdoing in the past. After all, this is your money, and there are many brokers out there who have a pristine disciplinary history.
In a similar regard, you can also search for information about a particular brokerage firm. You may also want to avoid placing your account with a brokerage that was found to have committed serious rule violations. You want to particularly be on the lookout for rule violations that involve dishonesty and intentional misconduct. There is a difference between failing to retain records and stealing customer assets.
FINRA Continues to Make Broker Check More Helpful
FINRA has recently enhanced the information that they provide in Broker Check. Now, FINRA Rule 4111 allows brokers who pose a high degree of risk to the investing public to be designated as “restricted” on Broker Check. You would even be able to see a literal red flag that alerts you that the broker is restricted.
The broker must deposit money into a restricted account at FINRA. Now, you will know this key fact when you search the broker online.
In the end, it is your call what to do with your own money and who you decide to trust. However, you should never be taken by surprise after the fact when you learn that you were far from the first person who was mistreated by the broker or the representative. Just a few minutes of research now can save you from a catastrophic loss and the stress of having to file a claim against your broker.
Contact a Mt. Pleasant FINRA Arbitration Attorney Today
If your broker has cost you money because they failed to follow the rules, you have legal recourse against them. While you cannot sue them in court, you can open an arbitration claim, where arbitrators will hear your case and issue a decision. FINRA rules allow you to get some or all of your money back. The attorneys at RP Legal LLC have a track record of helping wronged investors. You can call us today at (803) 805-7546 or message us through our website to speak with a lawyer.