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Consumers Reminded to Investigate Before Investing

Explore the background of any brokerage before committing your money

By Mark Huffman
ConsumerAffairs.com

May 8, 2009

Personal Finance • Consumer Prices Edge Up In October • Dodd Bill Addresses 'Too Big To Fail' • Study: Four Types Of Consumers Emerging From Recession • States Worry About Federal Preemption In Consumer Bill • Job Cuts Continue To Fall In October • Consumer Confidence Dips in October, But Rises for Holiday Season • Is The Recession Over? • Economy to Affect Two-Thirds of Families This Holiday • Fed Sees Improvement In US Economy • Consumer Prices Rise Slightly In September • Attorneys General Back Consumer Financial Protection Agency • Gold And Stocks: Are Both Dangerously High? • Study: Americans Crave Better Financial Knowledge • Hiring Begins To Emerge Even As Companies Shed Jobs • Economists Say Worst Of Recession Over • Economy May Force Early Retirements • White-Collar Workers Hit Hard By Recession • Fed Sees Recovering Economy • Six-In-Ten Workers Live Paycheck To Paycheck, Survey Finds • Seven Steps To Saving Money • Survey Suggests Improvement In Jobs Outlook • Stocks Still Outperform, Researchers Claim • Employment Prospects Brighten For Jobless Americans • Job Cuts Rise Following 15-Month Low • Little Sign of Inflation on the Horizon • CFA Applauds Plan to Strengthen Key Investor Protections • Consumers Fall Further Behind On Loans --- • More Personal Finance News

The economy has shown signs of life, Wall Street has been in rally mode for several weeks and millions of people with shrunken 401(k) accounts may be wondering where to put their remaining money. Before acting, a little homework may be in order.

That's the advice given about investing by the North American Securities Administrators Association in light of the Madoff Ponzi scheme and other high-profile breaches of trust by financial professionals.

"Information is an investor's best defense against investment fraud," said NASAA President and Colorado Securities Commissioner Fred Joseph. “The information you need to make an informed choice about who you entrust with your money is right at your fingertips. State securities regulators should be the first call for any investor seeking detailed background information about their stockbroker or investment advisor. And the time to make that call is before you turn over any money."

State securities regulators offer investors extensive employment, disciplinary and registration information about their stockbroker or investment adviser. As an investor, you can request a public report of background information on any stockbroker, brokerage firm, investment adviser and investment adviser firm.

To receive background information about a stockbroker, call your state securities regulator and ask for all materials from the Central Registration Depository about that individual. For similar information about an investment adviser, ask for all materials from the Investment Adviser Registration Depository. These computerized databases contain licensing and registration information on more than 650,000 stockbrokers and over 260,000 investment advisers.

You can also receive information on their employment, examination and disciplinary histories, civil judgments, arbitration decisions, criminal convictions or indictments, bankruptcies, as well as pending complaints, disciplinary actions, arbitration and civil proceedings.

"This information is easy to obtain, and state securities regulators want to help you to make informed decisions before you invest your hard-earned dollars," Joseph said. "While the vast majority of the stockbrokers, brokerage firms, investment advisers and investment adviser firms are honest and reputable, it pays to remember that just like many other professions, there are those individuals and firms who are not."

"If you suspect that something is wrong, the sooner you call your state securities regulator, the better," he concludes. "Your call also might help prevent others from being harmed by a fraudulent scheme."

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