Whether investing a little bit or a large sum, hiring a broker takes research, planning and a lot of trust. You expect your broker to be knowledgeable about the market, understand the current trends and wisely invest your resources. Even more than smart investing, you expect your broker to ethically invest following all rules and guidelines set by state and federal entities. If you are unsure about hiring a broker or uneasy with your current broker, start by following the steps below.
Before Hiring a Broker:
- Use the Financial Industry Regulatory Authority’s (FINRA) Broker Check tool to obtain a detailed broker report.
- Review your broker’s history for any disciplinary action from FINRA or any state or federal regulatory agency.
- Review investor alerts provided by FINRA, the Securities and Exchange Commission (SEC) and the Texas State Securities Board.
If concerned your broker is providing false or misleading information:
Ask yourself the following questions, has your broker:
- Advised you to purchase or sell a security that seems unsuitable considering your age, financial situation, investment objectives or investment experience?
- Purchased or sold securities without your authorization?
- Switched your mutual fund without give a reason for the change?
- Hidden key information or failed to provide the whole picture regarding an investment? (such as: the risks of investing in a particular security, the charges or fees involved, the company’s financial information or technical/analytical information)
- Removed funds from your investment account without your consent?
- Charged excessively high commissions, markups or markdowns when buying or selling securities?
- Promised you will not lose money on a securities transaction, predicted a specific price or agreed to share in any losses for a particular transaction?
- Engaged in a private securities transaction without informing or obtaining permission from his or her firm?
- Ordered securities without regard to you price limits?
- Issued a quote without indicating price limits?
- Failed to make efforts to secure your purchase, sale or securities at the best possible price based on prevailing market conditions?
- Indicated that he or she had material, non-public information when purchasing or selling a security?
- Used manipulative, deceptive or fraudulent methods to get you to purchase or sell a security?
If you answered yes…
If you answered yes to any of these questions, you may have an issue with your broker. By contacting a legal professional, you can begin taking the appropriate steps. You will need to report your broker’s conduct to several regulatory entities, including FINRA, SEC and the Texas State Securities Board. Suits against an investment firm or broker often require arbitration or mediation, and by consulting an experienced attorney early in the process, you can better position yourself to recover any losses from your broker’s mishandling.