How to Run a Background Check on Your Stock Broker - The Right Way

The Best Way to Learn More About Your Stock Broker

What you may not know, however, is that there is a highly sophisticated system of record-keeping for financial industry professionals administered by the Financial Industry Regulatory Authority (FINRA), and those records are freely available to the public. In fact, the public-facing part of FINRA's Central Registration Depository (or CRD) program, called BrokerCheck, was designed specifically for retail investors. It is meant to be your go to place when you are considering hiring a new broker, or if you just want to check up on your current broker to see what his track record looks like.

What Will I See on a BrokerCheck Report?

Much of the information on the report may seem irrelevant or unfamiliar. The most important information you can find there pertains to any Customer Disputes or Terminations in which your financial advisor was involved. Here is a more complete list of information you might see on a report:

  • Examination Qualifications
  • Employment History
  • Terminations
  • Customer Disputes
  • FINRA Disciplinary Actions
  • Outside Business Activities

It's important to remember that some of this information, such as Outside Business Activities, are self-reported via the broker's sponsoring brokerage company, so if you don't see something on the BrokerCheck report that you feel you should be seeing, contact your financial advisor directly - or contact his or her supervisor.

FINRA Overhauls CRD System

The BrokerCheck program is getting even stronger thanks to a recent overhaul by FINRA of its CRD system. The system, which underlies the BrokerCheck archive, is essentially a compliance interface for broker-dealers and the industry regulatory authority, FINRA. In an effort to keep its records on brokers more up to date and timely, FINRA is launching an initiative to close certain gaps in the CRD reporting system and to tighten up the feedback loop between the CRD and broker-dealers, so that any red flags thrown up by brokers will be recognized more quickly by their employers.

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In spite of FINRA's best efforts, and in spite of the advanced record-keeping programs it runs like the CRD system and BrokerCheck, financial advisors can still take advantage of investors or lose them money through negligent misconduct. If you or someone you know has been the victim of broker misconduct or investment fraud, please contact our securities attorneys immediately for a free consultation toll-free at 215 462 3330 or by using our online contact form.