subject: Online Tools Help Prevent Investment Fraud [print this page] Investing your money is a big commitment and nothing is worse than finding that you have fallen victim to investment fraud. The best way to make sure that your money is safe is to check the validity and security of all investments before you commit--no matter how good or credible they seem. The Financial Regulatory Authority (FINRA) and the Security Exchange Commission (SEC) provide user-friendly online tools that you can use to check the authenticity of your stockbroker and the investment opportunity.
BrokerCheck
BrokerCheck is a free, online tool available to anyone on the FINRA webpage. It provides investors with professional background checks of current and former professionals registered with the FINRA, including:
-Brokerages Firms
-Brokers
-Investment Adviser Firms
-Investment Adviser Representatives
You can search brokers and advisors by their name, firm name, zip code, or SEC number. The detailed report will include important information about brokers like:
-How long they have been registered as a broker, and in what states they are registered
-If they have ever been subject to regulatory actions, certain criminal matters, civil litigation, customer complaints, or other events required that require disclosure
-Their employment history with other brokerage firms
Brokers must be registered with the FINRA, the SEC and/or their state securities regulator. If your broker or investment advisor is not registered, you should walk away from the investment opportunity and report the broker to your state securities regulator. The FINRA website provides a list of contact information for all states securities regulators. Even if your broker is registered, you should reconsider your choice if there are civil or regulatory actions against the broker.
EDGAR
The SECs Electronic Data Gathering, Analysis, and Retrieval system (EDGAR) is a system that automatically collects and indexes the forms of companies who are required to file with the SEC. EDGAR is important for investors because it provides access to the financial statements of all publically traded companies.
As an investor, you are responsible for researching your investment options before you commit to the investment. Studying a companys financial statement for profits and losses can help you assess the types of risks a company makes and if it is a suitable fit for your investment. The SEC offers tutorials on how to use EDGAR effectively and how to read the financial statements you will encounter there.
No matter how often you have invested in the past or how savvy an investor you think you are, you should get in the habit of checking the security of all your potential investments. The FINRA reports that most fraud victims are college-educated and have an above average knowledge of investing.
Researching brokers and financial documents may seem time-consuming, but the ramifications of falling for investment fraud are enormous. You would have to hire an attorney who specializes in investment and stockbroker fraud cases. Even with the best attorney, securities litigation takes a long time and recovering your losses is not guaranteed. Getting in the routine of researching investments can save your time and money in the long run, and online tools make the process as easy as possible.
by: Dylan Taylor
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