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Brokers also have no legal responsibility to inform you of conflicts of interest. In fact, other 

parties—specifically, the companies offering the securities or the firms that brokers work 

for—may compensate brokers for selling you certain investments.

And when some less-than-scrupulous brokers stand to earn high commissions on certain 

investment products, they may not adhere to the suitability standard. Remember to make 

sure your investments are appropriate for your investing needs and how much risk you’re 

comfortable taking.

Brokers may be required to be registered with more than one regulatory authority,  

depending on where they live, to whom they offer securities, and the type of business  

they operate. Brokers engaged in the offer and sale of securities in Texas, for example, are 

required to be registered with the Texas State Securities Board. These brokers may also be 

subject to the oversight of the Financial Industry Regulatory Authority, a self-regulatory 

body for the industry.

It’s not a common occurrence, but it will sometimes take months or years for both investment 

advisers and brokers to report disciplinary actions and other red flags, such as customer  

complaints, civil court cases, and bankruptcies. Failure to report relevant information in a 

timely way, which generally violates securities regulations, means potential investors don’t 

have all the information they need when considering hiring an adviser or broker. 

researching A Broker

To research a broker, start with the Financial Industry Regulatory Authority’s  

BrokerCheck, a database that holds licensing and registration information for  

registered representatives and securities dealers and brokerage firms in the  

United States. The BrokerCheck report will tell you about a dealer’s or agent’s  

track record, including:

•

  Employment history for the past 10 years

•

  Disciplinary actions that have been taken by federal, state, and self-regulatory  

organizations

•

  Whether the broker or agent holds other professional designations such as a  

Certified Public Accountant or Certified Financial Planner

•

  Civil judgments and arbitrations in securities disputes

•

  Pending written complaints

•

  Criminal convictions or indictments

•

  Bankruptcy filings

•

   Outstanding liens and judgments

The BrokerCheck report is far from a complete record, however. It relies on self- 

reporting by registered firms and individuals, not all of whom submit to FINRA every 

document they should.