Got a Broker? BrokerCheck It before Using It

I am a do-it-myself person when it comes to investing. I do my own research and make my own investment decisions. I don’t use a broker or financial adviser.

However, if you want to get some professional help for investing/financial planning, it’s always good to know as much background information about the broker/adviser as possible before letting him/her handle your finance. Recommendations from friends and relatives are important in selecting the right broker. However, there is always some information (for example, any violations) that can’t be obtained from first hand experience and personal view sometimes is biased. If there’s any concerns regarding a broker, information about the broker’s working history that is presented as-is will be valuable to make your own decision on whehter that’s the person you want to work with.

There’s a tool that can give you some background information of a broker you have in mind. It’s the BrokerCheck from FINRA (Financial Industry Regulatory Authority), formerly NASD. From the description:

FINRA BrokerCheck is a free online tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. It should be the first resource investors turn to when choosing whether to do business with a particular broker or brokerage firm.

I used the tool to check one of my friends who is a registered broker and found very thorough information on his current registration, qualifications (industry exams passed), complete registration and employment history, and affiliation history. Information disclosed by BrokerCheck include:

regulatory actions, investment-related civil suits, customer disputes that contain allegations of sales practice violations against brokers, all felony charges and convictions, misdemeanor charges and convictions relating to security violations, and financial events such as bankruptcies, compromises with creditors, judgements, and liens.

Information on BrokerCheck report is generated from Central Registration Depository (CRD) and is up-to-date as broker, brokerage firm, or regulator is requited to submit a report within 30 days of an event.

Following is the screenshot (click to enlarge) of the summary of the convicted broker Frank Quattron. BrokerCheck can generate full report in PDF format as well (here’s a sample copy of Frank Quattron’s report).


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5 Responses to “Got a Broker? BrokerCheck It before Using It”

  1. AskProfit |  Sep 26, 2007 at 3:30 pm

    Great information! When i was working as a compliance officer at a buyside investment firm I used this service regularly to perform due dilligence on new brokers we would use to invest with. From there I started using it for personal investing.

  2. Robyn Fulfillment Services |  Sep 27, 2007 at 1:52 pm

    Very nice article and Broker Check is a great tool. Thanks for all the information.

    Robyn Promo