The Financial Industry Regulatory Authority (FINRA) is a self-regulatory body tasked with the responsibility of supervising securities firms and financial professionals in the U.S. Its primary aim is safeguarding investors by ensuring broker-dealers, investment, and their employees operate in a manner that is fair, ethical, and in compliance with relevant laws and regulations.
FINRA has oversight of thousands of firms, which encompass brokerage firms, investment banks, and funds and trading platforms.
If you suspect there is an issue with your financial advisor or brokerage firm, please feel free to call our experienced FINRA arbitration lawyers at 1-800-856-3352.
Checking A Financial Advisor or Brokerage Firm with BrokerCheck
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BrokerCheck is a free tool provided by the Financial Industry Regulatory Authority (FINRA) that allows you to look up the professional backgrounds of current and former FINRA-registered brokerage firms and brokers, as well as investment advisor firms and representatives. Here’s how you can use it:
- Go to the BrokerCheck website: You can find the BrokerCheck tool on FINRA’s official website or directly at https://brokercheck.finra.org/.
- Search for a broker or firm: On the homepage, you’ll find a search bar where you can enter the name of a broker or a brokerage firm. If you’re searching for a broker, it’s best to use their full name for the most accurate results. Similarly, use the full name of the brokerage firm if you’re searching for a firm. After entering the name, click on the “Start Search” button.
- Review the results: The search results will provide a list of brokers and/or firms matching the name you entered. Find the correct broker or firm in the list and click on their name.
- Review the broker or firm’s profile: Once you click on a name, you’ll be taken to a profile page with a wealth of information about the broker or firm. This includes a snapshot summary, qualifications, registration and employment history, and a detailed report of any disclosures. Disclosures can include disciplinary actions, regulatory events, investigations, and customer complaints.
- Consider the broker or firm’s history and qualifications: Use the information provided to make an informed decision about whether or not you want to do business with the broker or firm. Be wary of those with a significant number of customer complaints or a history of regulatory infractions.
- Print or download a report: If you want to save a copy of the broker or firm’s profile for later, you can print or download a report directly from the BrokerCheck website.
Remember, while BrokerCheck is a great tool for investigating the history of a broker or firm, it should not be the only tool you use in your decision-making process.
You should also consider other factors such as your financial goals, the broker or firm’s investment strategy, and their fee structure. It can also be helpful to consult with a financial advisor or do additional research online before making a final decision.
What is Financial Industry Regulatory Authority (FINRA)?
The Financial Industry Regulatory Authority (FINRA) is a not-for-profit organization authorized by Congress to regulate brokerage firms and professionals dealing with the public in the U.S. Born out of the merger of regulatory functions of the National Association of Securities Dealers (NASD) and New York Stock Exchange’s (NYSE) Regulation in 2007, FINRA’s mission is to protect investors by maintaining fair and efficient markets while ensuring brokers and broker-dealers comply with federal securities laws and regulations.
Defining FINRA Complaints
A complaint lodged with FINRA refers to a formal allegation by an investor against a brokerage firm or its top advisor or registered representative. These complaints may stem from issues like fraudulent activities, unsuitable recommendations, breach of fiduciary duty, or other unethical actions by the clients’ brokerage account or financial professionals. Investors who believe they have been unfairly treated can file a complaint directly via FINRA’s online portal.
Understanding FINRA Complaints
Knowing how to lodge a complaint with FINRA and the ensuing investigation and arbitration process is vital for protecting investments against potential fraud or misconduct. Filing a complaint with FINRA, irrespective of whether it results in disciplinary actions, signals to the broker-dealer community and regulators the expectation of adherence to ethical standards. It also promotes transparency by providing data on received complaints regarding specific individuals or firms. Investors should be aware that filing a complaint with FINRA means actively safeguarding their investments against risks and investment losses and contributing to fairness, honesty, and transparency in the financial sector.
Types of FINRA Complaints in the Securities Industry
FINRA processes a wide array of complaints against broker-dealers, registered representatives, and other financial professionals. These may include allegations of fraud, misrepresentation, unsuitable investments, unauthorized trading, insider trading, market manipulation, failure to supervise, breach of fiduciary duty, among others.
Aside from complaints from investors and the public, FINRA may initiate investigations based on market surveillance or regulatory examination findings.
FINRA’s Role in Complaints Against Brokerage Firms
When an investor files a complaint against a firm, a broker-dealer or a registered representative with FINRA’s online or over-the-phone Investor Complaint Center (ICC), an investigator reviews it for completeness and determines whether there’s sufficient information to initiate an investigation or formal complaint. If evidence suggests possible securities law violations, an investigation into the allegations begins.
If the investigation substantiates violations, FINRA could impose monetary fines, take disciplinary actions such as suspending licenses, or even permanently ban the individuals or firms from participating in securities transactions. In this way, FINRA plays a critical role in helping investors resolve complaints related to securities sales and maintains the integrity of the financial markets.
Common Types of FINRA Complaints
FINRA complaints can emerge from a multitude of issues related to securities transactions. Common types file complaints include misrepresentation and fraudulent activities, breach of fiduciary duty, and unsuitable recommendations. Investors should vigilantly examine any investment recommendations that don’t fit their financial goals or resulted in financial losses.
Besides, investors should watch out for evidence of excessive trading or a pattern of unsuitable recommendations. If you believe you’re a victim of misrepresentation and fraudulent activities, breach of fiduciary duty, or unsuitable recommendations, you can protect your rights as an investor and potentially recover money or losses by filing a complaint with FINRA.
Filing a Complaint with FINRA
To file a complaint with FINRA, certain requirements must be met. The complaint should be against a FINRA-associated individual or firm and the claim should concern a violation of securities laws or industry regulations. Moreover, the complaint or claim should involve monetary damages suffered due to alleged misconduct. While it isn’t mandatory to have an attorney, consulting one can be beneficial, especially when you’re unsure about your rights or legal options.
Once a complaint is lodged with FINRA, it launches an investigation to determine its merit. The process involves reviewing all relevant documents, conducting interviews with all parties involved, and accessing industry databases to identify potential red flags and patterns of misconduct. If evidence of wrongdoing is found, FINRA may initiate formal disciplinary proceedings against the alleged party.
The duration of the investigation process can vary widely depending on the complexity of the case file and the cooperation level of all involved parties. Most investigations are typically completed within six months from when they were opened. However, more complex issues or multiple-party cases may take significantly longer to resolve.
To conclude, reporting financial misconduct is pivotal for maintaining the integrity of the financial markets. It helps identify and eliminate fraudulent behavior that could potentially harm other investors. Moreover, early reporting can lead to early detection and investigation by regulatory bodies like FINRA, preventing further harm to unsuspecting investors, particularly those who may be financially vulnerable. Hence, the importance of reporting financial misconduct cannot be overstated.
We should remain optimistic that reporting systems will continue to evolve, enabling anyone who suspects wrongdoing by financial professional to come forward without fear of retaliation. By doing so, we can help create a safer and more secure environment for investing their money, while promoting transparency and accountability for risk, across all sectors.