Ask and Check

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U.S. securities laws require brokers, investment advisers and their firms to be licensed or registered—with FINRA, the Securities and Exchange Commission or a state securities regulator, depending on the type of business the firm conducts—and to make important information public. In addition, with very few exceptions, companies must register their securities with the SEC before they can sell shares to the public.

It's up to you to find that information and use it to protect your investment dollars. Regardless of your trust or ties, or prior dealings with the professional, do your homework.

Before you invest or pay for any investment advice, make sure the investment professional is registered, and that he or she has not had disciplinary problems or been in trouble with regulators or other investors. One call or web search may save you from sending your money to a con artist, an unscrupulous financial professional or a disreputable firm.

"Ask" about the registration status of an investment professional and the investment, and separately "check" with regulators to be sure.

To check out the seller:

  • Ask: Are you and your firm registered with FINRA? The SEC? A state securities regulator? If so, which one(s)?
  • Check: Use FINRA BrokerCheck for access to the registration information for both FINRA- and SEC-registered investment professionals. Also, be sure to call your state securities regulator. This will give you information on the individual’s employment history, qualifications, disclosure events and more. Be sure to also check the SEC Action Lookup tool for enforcement actions that the SEC has brought against individuals (registered and non-registered). See FINRA for more on where and how to check.

To check out the investment:

  • Ask: Is this investment registered with the SEC or with my state securities regulator? If not, why not?
  • Check: Researching investments is part of an investor’s due diligence. Lack of registration could be a red flag, as scams often involve unregistered investments. See the SEC’s tips for researching investments to confirm what the salesperson tells you. Also call your state securities regulator to find out what they know about the investment.


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