FINRA Broker Check May NOT Uncover a Problem Broker. Here's what to do.
The Financial Industry Regulatory Authority (FINRA) maintains their BrokerCheck service to allow investors to check the background of investment professionals.
The information made available through FINRA BrokerCheck is derived from the Central Registration Depository (CRD®), the securities industry online registration and licensing database, as reported on industry registration/licensing forms brokers, brokerage firms and regulators complete.
BrokerCheck features professional background information on approximately 660,000 currently registered brokers and 5,100 currently registered securities firms. Information is also available on thousands of formerly registered firms and brokers.
So, you went to FINRA broker check and you did not see any customer
Maybe not !
Over the years we have filed multiple complaints against the same broker (s) , but, if you went to FINRA Broker Check, you would not view a single customer complaint filed against them.
Why is that?
Because brokers often get expungement as part of the settlement
process. So, typically, when brokers have settled out, as part of the
agreement, we will not oppose expungement. And you would never know about
that, unless you expanded your search.
Go to the FINRA arbitration awards online. Go to search, insert the broker's name, and see if there are any awards in which his or her record was expunged.
Although even that extra precaution may still not reveal the whole story, it may likely give a much clearer picture of the broker's record than relying on FINRA broker check alone. FINRA has provided most of the tools you need, but unless you know how to use these tools, you may be getting information which is "inaccurate".
While this should help you avoid a problem with a new broker, if you already HAVE an issue with losses you feel are unwarranted, arbitration is the stock brokerage industry’s dispute resolution system. FINRA arbitration provides a relatively inexpensive and consumer friendly way for investors to resolve financial disputes with their stockbrokers, financial planners and investment advisors. You should absolutely consider FINRA arbitration if you have lost more money with your broker than you thought you could lose, or for any of the other reasons we describe elsewhere in this site.
The Securities arbitration process performed by Investors Recovery Service includes, at a minimum, the following actions:
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