You work hard for your money, so when you trust it with a broker or investment adviser you want to make sure that person or company is legitimate. While the majority of the stockbrokers, brokerage firms, investment advisers and investment firms are, indeed, reputable, it never hurts to do your homework because sadly there are some individuals and firms ready to take advantage of you and your money.
State and federal laws require brokers, advisers and firms to be registered or licensed. With this in mind, before you invest your money it may be helpful to contact the securities regulator in your state. Among other things, the state securities regulator can provide employment information about a broker or investment adviser, as well as disciplinary and registration information. You can find contact information for your state securities regulator here.
The North American Securities Administrators Association offers several resources in this area on its Web site. Other helpful hints from NASAA on what to do before investing your money include asking for all materials from the Central Registration Depository (CRD) about your prospective stockbroker. This computerized database contains licensing and registration information on more than 650,000 stockbrokers.
In addition, search the Investment Adviser Public Disclosure (IAPD) Web site for information on investment adviser representatives and firms registered with state securities regulators and the Securities and Exchange Commission (SEC).
Lastly, you can find information and research on brokers, brokerage firms, investment adviser representatives and investment adviser firms through the BrokerCheck Web site of the Financial Industry Regulatory Authority (FINRA).