For other investments, you can research brokers, brokerage firms, investment advisers and firms with this free tool from the Financial Industry Regulatory Authority, FINRA’s BrokerCheck. With this special offer, the GPO best-selling book on Ponzi schemes and other investment frauds and how to avoid them, Ponzimonium: How Scam Artists Are Ripping Off America, is now AVAILABLE FOR FREE as an eBook from the CFTC on the US Government Bookstore website.
The information on BrokerCheck is largely self-reported and negative disclosure events may be missing or have been expunged from a broker's record. Despite its shortcomings, BrokerCheck is still a resource that is available and should be used.
Last week, I performed an advisor and firm search at BrokerCheck for someone in Minneapolis. CONCLUSION: If I were the client of either this broker (registered representative) or the firm, my trust would be shaken and I would be very concerned about my account. In this post, I share with you how I use BrokerCheck in hope that it will inspire and help you use it too.
Next step, we will do a search on the registered investment adviser -- the FIRM -- that handles the broker's investment management services. Alarmingly, as reported by CNBC, the Public Investors Arbitration Bar Association, a lawyers' group, found that brokers who asked arbitrators to recommend expungement got approval in 96.9 percent of cases that were settled from May 18, 2009 to Dec. Clearly, 15 separate clients filed complaints that directly contradict the statement that the broker made about working within his clients' wishes.
As for checking it out, there are a few simple things consumer should ALWAYS do, no matter the profession.
In my informal and unscientific poll, I found that fewer than 1 in 10 investors had heard of BrokerCheck.
FINRA is a non-governmental organization that regulates member brokerage firms and exchange markets. Remember part of what you read is the broker's statement so in it, he attempts to defend himself.
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