Ask and Check

Check Out the Seller

If a salesperson is trying to sell you an investment, check them out by following these steps.

Step 1: Ask "Are you licensed to sell me this investment?"
Legitimate investment professionals—including brokers, investment advisers and insurance agents—must be licensed with the Financial Industry Regulatory Authority (FINRA), the Securities and Exchange Commission (SEC) or your state securities or insurance regulator before they can sell you anything. If they say they aren't licensed, say good bye—and don't buy.

Step 2: Check.

If they say they are licensed, check them out as follows:

FINRA BrokerCheck Tips

Here are some helpful tips when checking out a salesperson using FINRA BrokerCheck:

• If you don't find the person in FINRA BrokerCheck, it can mean:
• • The name of the broker or brokerage firm is misspelled. Try doing an advanced search where you can use the "begins with" or "sounds like" options, or brokerage firm index search.
  • The person is not licensed to sell securities.
  • The broker is not registered with FINRA; has not been registered with FINRA in the last two years; and, has no record of a final regulatory action (including a bar, suspension or fine imposed by FINRA, the SEC or other federal or state regulatory agencies). Information on a former broker who has not been FINRA-registered in the last two years and has no record of a final regulatory action may be available from your state securities regulator.
  • The brokerage firm is not a securities dealer. FINRA provides information only on registered securities brokers and brokerage firms, not investment advisers. If you are looking for a firm that you think is an investment adviser, you can look it up on the SEC's Investment Adviser Public Disclosure Web site.
    
    
• If the person is in FINRA BrokerCheck, that's a good sign. It means they are licensed through their employing firm and subject to a comprehensive set of regulations that governs their business. This regulation includes rules, individual testing, fingerprinting, inspections, reporting, and enforcement actions, among other things. (Note: BrokerCheck keeps broker records available to the public for two years after a broker is no longer licensed.)
  
  
• Pay close attention to a broker's disclosure information. The disclosure section of the BrokerCheck report includes details regarding disclosure events reported by or about the broker as part of the securities industry registration and licensing process. Examples of such disclosure events include formal investigations and disciplinary actions initiated by regulators, customer disputes, certain criminal charges and/or convictions, as well as financial disclosures, such as bankruptcies and unpaid judgments or liens.
  
  In an effort to remain objective, FINRA lists each incident as reported by securities regulators, the individual broker and any involved firms. Please keep in mind a number of items involve pending actions or allegations that have not been resolved or proven. The presence of this information does not automatically indicate wrongdoing on the part of the broker.
  
  
• Review the broker's qualifications. This section of the report describes where the broker is licensed and registered to do business. Check to make sure that the broker is licensed in your state.
  
  
• Review employment history. This section provides the last ten years of the broker's employment history—including a list of FINRA-registered securities firms where the broker was previously registered as well as the any self-employment, military service, unemployment and full-time education that the broker reports. Review this information as you would the résumé of any person you would consider hiring. Look for potential issues that you would want them to explain, such as many job changes in a short period of time.

Additional Resources