Checking Out Your Broker!

Over the past several years, complaints against stockbrokers have surged to record highs. To find a broker you can trust, an important step in the investigative process is doing a background check. If a broker has had run-ins with investors or been convicted of a crime, you can find out about it in records that the securities regulators make available to the public. Even if you uncover no wrongdoing, simply inspecting a broker's employment history can be useful. How do you play detective? Simply follow one of these two paths:

Path A:

1. Go to nasdr.com (which you will find in our "Links" section under NASD), site of the National Association of Securities Dealers. Then click on Broker/Advisor, then NASD Regulation Public Disclosure Program, then Perform an Online Search.

2. Type in a broker's name and firm. You should see a job history dating back 10 years and the states where the broker is licensed. If the broker has switched firms frequently, ask why?

3. To find out if a broker has been convicted of a felony or filed for bankruptcy, click on Disclosure Events. If "Maybe" appears, request e-mail copies of the records.

4. If the broker has been involved in securities arbitrations, go to www.nasdadr.com for further details.


Path B:

1. Find links to state securities regulators by visiting www.nasaa.org , the site of the North American Securities Administrators Association. State regulators can send you Central Registration Depository (CRD) reports, which offer more detailed disciplinary records than those NASD provides.

2. Call the phone number listed at your state regulator's Web site to request a broker's CRD report. (Unfortunately, states don't offer this information online.) The report may take weeks to arrive, but it's usually worth waiting for. It often lists complaints that don't appear at NASD's site.

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