SEC Takes Aim at Unregistered Advisors in New Alert

Hoping to clean up the reputation of a profession that suffers from what seems like an unusual number of imposters and scam artists, the SEC has announced that it will be enlisting the help of investors to identify phony stock brokers and investment advisors.

Four Ways to Check Your Broker’s History

In a new alert aimed at retail investors, the SEC has asked that, whether they are considering a new advisor or have been working with the same one for decades, investors do a quick background check on the advisor’s background for red flags. Above all, SEC has warned investors to look out for unregistered “advisors” who have not been tested and validated by the SEC or its regulatory arm, FINRA. Once investors have conducted the background check, they may find it best to slow down their connection to the broker — or in extreme cases, contact the SEC about any irregularities in a broker’s registration or employment history.

Doing a background check on your broker is simple. The SEC has a search tool at You can use its SALI tool (SEC Action Look Up) to see if your investment professional has been involved in an SEC action. You may also call the SEC’s hotline for investor assistance at (800) 732 0330. Or if you’re looking into the background of a financial advisor, you can use FINRA’s BrokerCheck database.

Other Red Flags Your Broker May Be Sketchy

According to the SEC, advisors who have engaged in misconduct in the past are five times as likely to do it again. The SEC also mentioned that investors should be aware of other red flags besides what might appear on a broker’s background check. Those include claims of outsized returns; investment statements that appear to be amateurish or doctored; and promises of low or no risk for very high rewards.

Pennsylvania & New Jersey Securities Litigation Law Firm

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If you or someone you know has been the victim of investment fraud or broker misconduct, please contact our securities litigation team immediately for a free consultation at 215 462 3330 or by using our online contact form.