Selecting a Stockbroker—Part IV

Law IAC
Hector Rojas, Spring 2017 Student Intern

So far in this series, we have defined the term broker, discussed their role, how their conduct is governed, and why this matters to you. In part four of this series we will discuss some of the tools available to investors to learn more about their brokers.

How do I learn more about my broker?

Brokers have a report card, called a CRD.  The CRD is a computerized database with information about most brokers, some investment advisers, their representatives, and the firms they work for. The CRD provides information about brokers’ educational backgrounds, regulatory problems, and investor complaints.  One of the main tools available to investors to get information from the CRD is through FINRA’s Broker Check program.

BrokerCheck provides the following information on individual brokers:

  • A summary report that provides an overview of the broker and his or her credentials
  • A listing of the broker’s qualifications, including current registrations or licenses and industry exams that the broker has passed
  • Previous employment data for the past 10 years, both in and outside the securities industry, as reported by the broker
  • Any customer disputes or regulatory and disciplinary events on the broker’s record.

To contact FINRA, either visit FINRA’s BrokerCheck website or call FINRA’s toll-free BrokerCheck hotline at (800) 289-9999.

State Securities Regulators

In addition to FINRA’s Broker Check program, investors can contact their state securities regulator to provide them with information from the CRD. According to the SEC, “[b]ecause your state securities regulator may provide more comprehensive information from the CRD than FINRA, especially when it comes to investor complaints, you may want to check with your state securities regulator first.”

You’ll find contact information for your state securities regulator on the website of the North American Securities Administrators Association.

Google

Do not underestimate the usefulness of Google, or other similar web search engines, to learn more about your broker.

Moving forward…

So, there you have it. The information we covered is just some of the ways you can learn more about your broker and the firm they work for. In the final part of this series, we will briefly review what we have discussed thus far and provide a few key tips that the SEC has provided to help investors make a well-informed choice when confronted with the decision of selecting a stockbroker. See you then.