Stock brokers are required to report an array of information to allow investors and customers to make informed decisions as to whether to hire a broker. This information includes a broker’s current and prior registrations and employment history, business enterprises outside of the securities industry, current licensing and registrations of the broker, and most important a list of customer disputes and regulatory or disciplinary history. Likewise, reports are also maintained for brokerage firms which show a firms ownership and history, its licenses and registrations, a description of its business, and arbitration awards and regulatory and disciplinary history. Excessive customer disputes or a disciplinary history are red flags that should cause you to ask more questions.
FINRA and state regulators share and maintain this information in a national database called the Central Registration Depository or “CRD” as it is commonly referred to. The public can request CRD reports from these agencies. Also, FINRA maintains an online version which provides some of this information at FINRA BrokerCheck®.
Reviewing a brokers CRD is a great way to start investigate your investment professional before hiring him or her. Also, it is a good place to check out if there have been any new developments or issues that your broker has concealed from you.
