How Well Do You Know Your Broker or Investment Advisor?


It’s a simple question, but one that most people don’t think about nearly as much as they should: How well do you know your investment advisor? Unfortunately, while there are plenty of honest, experienced advisors who make smart investment recommendations and build their clients’ portfolios over time, there are far too many others who either (i) do not know what they are doing, (ii) take unreasonable risks (often for personal financial gain), or (iii) make a living by intentionally defrauding their clients.

Consider the following examples:

  • An investment firm led by a well-known value investor lost over $2 billion of investors’ funds in a little over 12 months. The losses stemmed from the firm’s decision to invest heavily in extremely low-rated junk bonds, which ultimately led to the investors’ substantial losses. The firm and its executives are now facing hundreds of millions of dollars in liability in civil litigation, as investors are expected to recover less than 75 percent of their original investments.
  • Investors in bond funds sold by UBS recovered $3.1 million in compensation after an arbitration panel ruled in their favor. The case arose out of allegations that UBS had improperly invested clients’ assets in the proprietary bond funds and used clients’ funds as collateral for borrowing on lines of credit. The investors’ claims included allegations of fraud, overconcentration, unsuitability, breach of fiduciary duty and breach of contract.

Sadly, this list could go on and on.

Online Tools for Researching Brokers and Investment Advisors

If you are considering hiring a new broker or investment advisor (or if you have questions about your current broker or advisor), there are two important online resources you should be sure to use. These are FINRA’s BrokerCheck® and the Securities and Exchange Commission (SEC) Registered Investment Professional database.

FINRA’s BrokerCheck®

The Financial Industry Regulatory Authority (FINRA) is responsible for overseeing and regulating brokers and brokerage firms throughout the United States. FINRA’s BrokerCheck® is a free service that allows investors to research brokers’ experience, licenses, certifications, client complaints and disciplinary history. You can search by either brokerage firm or individual broker.

Search FINRA’s BrokerCheck®.

SEC Registered Investment Professional Database

Investment advisors generally must register either with the SEC or with their local state securities authority before offering their services to the public. To find out if your investment advisor is registered, you can check with the securities regulator in your state, or you can search the SEC’s online database of SEC-registered investment advisors. Similar to BrokerCheck®, you can search the SEC’s database by advisory firm or by individual advisor.

Search the SEC’s Registered Investment Professional database.

Of course, just because a broker or advisor is registered and has a favorable history, this does not mean that he or she will necessarily act with your best interests in mind. If you suspect fraud or misconduct, you should speak with an experienced attorney as soon as possible.

Contact an Investment Fraud Attorney at Zamansky LLC

If you have suffered unexpected investment losses and believe that your broker or investment advisor may be to blame, we encourage you to contact us for a free, confidential consultation. Zamansky LLC is a leading investment fraud law firm that represents individual investors nationwide. To speak with a lawyer about your situation and learn how we may be able to help you recover your investment losses, call (212) 742-1414 or submit our request form today.