Labor & Employment Law

Get Your Broker's History For Free

By Dobin & Jenks

Every stockbroker is required to register with the state in which he or she does business and with, at a minimum, FINRA (formerly known as NASD). A broker's background, as maintained by FINRA, can be found here. Every customer of a broker should look at the broker's background before trusting their life savings to a stranger.

And every broker is a stranger. No matter how much you know about your broker, you will certainly not hear of arbitration awards or regulatory sanctions. The new BrokerCheck generates a very user-friendly report in pdf format which can be saved for future reference. It contains the broker's employment history, registration history, any outside business affiliations and, if applicable, and regulatory/litigation history.

Most brokers have clean records or records with minor dings on them. Other brokers have plenty of dings but they may be due to a product failure, such as Limited Partnerships or firm research stocks. But a consistent history of such magic terms as "unauthorized trading" or "unsuitability" should give you reason to look elsewhere. It may mean that the broker you're speaking with has a difficult time complying with the rules. With over 50,000 registered brokers, you should be able to find one that suits your needs.

That's the view from The Law Planet - Jupiter, Florida.

Full post as published by The Law Planet Blog on October 15, 2007 (boomark / email).