Transparency Bootcamp – BrokerCheck 101 By: Brenda Hamilton Attorney

Securities Lawyer 101 Blog

Any investor seeking to find out information about a penny stock should begin by investigating management, brokers and the promoters involved with the issuer.  FINRA BrokerCheck provides a free online database about brokers and brokerage firms, as well as investment adviser firms and representatives. Investors can learn whether current or former persons involved with the issuer has been sanctioned by securities regulators. 

Investors should also review the SEC’s website at http://www.sec.gov,  and state securities regulator sites.

FINRA has adopted rules for disclosing information about brokerage firms and brokers registered with FINRA or a national securities exchange to help investors determine whether to conduct, or continue to conduct, business with these brokerage firms and brokers. FINRA also provides the public with access to relevant information about formerly registered brokers who, although no longer in the securities industry in a registered capacity, may work in other investment-related industries or may seek to attain other positions of trust with potential investors. Through its BrokerCheck service, FINRA also provides basic information about investment adviser representatives and firms from the Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD) database. More detailed information about these individuals and firms can be obtained via the provided hyperlinks to the IAPD website.

A BrokerCheck report from FINRA can be obtained in any of the following ways:

  • Visiting BrokerCheck at www.finra.org/brokerCheck;
  • Calling the BrokerCheck toll-free Hotline at (800) 289-9999;
  • Submitting a request via U.S. mail or fax. The BrokerCheck mailing address and fax number are:
    FINRA BrokerCheck
    P.O. Box 9495
    Gaithersburg, MD 20898-9495
    Fax: (240) 386-4750

BrokerCheck Sources
Information about brokers and brokerage firms made available through FINRA BrokerCheck is derived from the Central Registration Depository (CRD), the securities industry online registration and licensing database, as reported on industry registration/licensing forms brokers, brokerage firms and regulators complete. BrokerCheck also provides basic information about investment adviser firms and representatives from the Securities and Exchange Commission’s Investment Adviser Public Disclosure database. The BrokerCheck report reflects information that FINRA requires brokers, brokerage firms, and regulators to report as part of the securities industry’s registration and licensing process.

Contact information, including corporate addresses, is available via BrokerCheck and the Securities and Exchange Commission’s Investment Adviser Public Disclosure database. You can also review the complete list of FINRA-registered brokerage firms, which includes contact information.

BrokerCheck Updates
Generally, currently registered brokers and brokerage firms are required to update their professional and disciplinary information in CRD within 30 days. Under most circumstances, information reported by firms, brokers and regulators is available in BrokerCheck the next business day. Information is usually not updated for firms that are no longer registered with FINRA or a national securities exchange, and for brokers who are no longer registered and not subject to the jurisdiction of FINRA or a national securities exchange.

BrokerCheck Searches
There could be a number of reasons why the brokerage firm, broker, investment adviser or investment adviser representative is not listed, such as:

  • The name of the firm or individual name is misspelled.
  • The CRD Number, SEC Number, or zip code are incorrect or invalid.
  • The individual is not included in BrokerCheck or the Securities and Exchange Commission’s Investment Adviser Public Disclosure database because he or she:
    • is not currently registered with FINRA, a national securities exchange or a state securities regulator and has not been so registered within the last 10 years, or
    • has not been registered with FINRA, a national securities exchange or a state securities regulator within the last 10 years and either:
  1. is not the subject of a final regulatory action;
  2. has not been convicted of or pled guilty or no contest to certain crimes;
  3. has not been subject to a civil injunction involving investment-related activity or been found in a civil court to have been involved in a violation of investment-related statutes or regulations; or
  4. has not been named as a respondent or defendant in an arbitration or civil litigation in which he or she was alleged to have committed a sales practice violation, and which resulted in an award or civil judgment against the individual.

Verifying a Broker or Firm is Registered. 
Investors can verify that a brokerage firm is FINRA registered by checking the Registrations section of the firm’s BrokerCheck report. Every brokerage firm on FINRA BrokerCheck is currently, or was previously, registered with FINRA or a national securities exchange.  The address of any registered branch(es) where a broker is currently conducting business will be provided on the Report Summary page of the BrokerCheck report, as well as in the full report under the Branch Office Location section.

BrokerCheck Disciplinary Actions
The hyperlink indicates that the regulatory action is available on FINRA Disciplinary Actions Online. This database provides FINRA disciplinary actions that were issued during 2005 or later, and are eligible for publication pursuant to FINRA Rule 8313 (Release of Disciplinary Complaints, Decisions and Other Information). The database also includes opinions issued by the SEC and federal appellate courts that relate to FINRA disciplinary actions that have been appealed. To access the disciplinary action and any associated opinion, click on the hyperlinked docket/case number in the BrokerCheck report and accept the terms and conditions for FINRA Disciplinary Actions Online.

For further information about this securities law blog post, please contact Brenda Hamilton, Securities Attorney at 101 Plaza Real S, Suite 202 N, Boca Raton Florida, (561) 416-8956, or [email protected] or visit www.securitieslawyer101.com.   This securities law blog post is provided as a general informational service to clients and friends of Hamilton & Associates Law Group and should not be construed as, and does not constitute, legal and compliance advice on any specific matter, nor does this message create an attorney-client relationship. For more information about going public and the rules and regulations affecting the use of Rule 144, Form 8K, crowdfunding, FINRA Rule 6490, Rule 506 private placement offerings and memorandums, Regulation A, Reverse Merger transactions, Form S-1 , IPO’s, OTC Pink Sheet listings, Form 10 and OTC Markets disclosure requirements, DTC Chills, Global Locks, reverse mergers, public shells, direct public offerings and direct public offerings please contact Hamilton and Associates at (561) 416-8956 or [email protected] Please note that the prior results discussed herein do not guarantee similar outcomes.

Brenda Hamilton, Esquire
Hamilton & Associates Law Group P.A.
101 Plaza Real South, Suite 202 North
Boca Raton, Florida 33432
Telephone: (561) 416-8956
Facsimile: (561) 416-2855
www.SecuritiesLawyer101.com