FINRA is far from a shadowy regulatory agency. They do their best to find themselves in the public eye, if only to keep investors informed on current regulations and scams. They also keep an exhaustive database of the professional records of all registered broker-dealers and financial advisors; the database is online and searchable. FINRA’s BrokerCheck is a mighty tool for investors seeking to learn more about their advisors; it’s one of many tools and rules that investors can use to protect themselves against fraud and malfeasance.
The last few months have been a difficult time for many investors. The stock market has taken a major dive, closing out 2018 with the worst performing December since The Great Depression. With so much volatility, it’s crucial that investors have a carefully planned portfolio with an adequate amount of diversification. Above all, that portfolio should match the individual investors risk tolerance and investment objectives. That match must be valid from the day it was made until today. A portfolio that worked for an individual investor in a bull market may be a terrible match for that same person in a bear market.
We may never forget Madoff’s crimes. Let’s hope we don’t. And yet, investors still fall prey to so-called “mini-Madoffs” every day all over the country. If you keep your eye on the financial press, particularly news from regulators such as the SEC or FINFRA, Ponzi schemes identical in nature and structure — if not scope — to Madoff’s bubble up and burst too often to keep track.
An investor gets introduced by mutual friends to a financial professional who almost immediately begins pitching the investor on an amazing opportunity. Because the investment professional seems like a good guy or gal, and because he or she was introduced by someone the investor already knows and trusts, the investor unconsciously transfers that sense of trust to the broker or hedge fund manager or mutual fund whiz. The investor’s guard is already down. What happens next?
In order to reform the system, investor advocacy groups have suggested the SEC enhance the standard to which brokerages and brokers are held with regard to investor best interests. Currently the standard is based on the necessity of matching investor and investment through a concept known as "suitability." Investor advocates like PIABA, however, want to raise the bar to the "best interest” standard.
Investment advisors and financial advisors are held to different standards of accountability when it comes to the investments they make on behalf of clients. Investment advisors have long been held to what is called the "fiduciary standard." Find out what the difference means for you and your money.
Thanks to a recent decision by the Fifth Circuit, it appears that brokers will, once again, get off the hook when it comes putting their clients' interests in front of their own. Into the breach has stepped an idea that has been kicking around for a years now, but which may be the best of several uninspiring options to compel brokers to act more responsibly toward investors: The Oath.
According to FINRA, while there is no airtight definition of a high-risk (yet), the regulatory body deploys a set of criteria to help identify these individuals and ratchet up the oversight on them. However you can use these criteria yourself to evaluate your own or a potential FA for excessively risky behavior.
No, it's not the Polka King of Pennsylvania but something far more prosaic. Last week, according to complaint released by the Securities and Exchange Commission (SEC), a former stockbroker based in Wayne, PA has been sentenced to more than 5 years in prison for operating a $2.35 million ponzi scheme that involved 30 investors.
The Financial Industry Regulatory Authority (FINRA) has released a serious of proposals aimed at implementing tougher supervisory protocols on brokers with a history of misconduct. Sponsoring brokerages would be forced to institute heightened supervisory measures on these brokers or be held responsible for any subsequent transgressions.
According to the Economic Policy Institute (EPI), undisclosed conflicts of interest between investors and advisors costs investors an estimated $17 billion per year. The EPI came to this estimate by calculating the amount of investment losses for people who bought retirement products on recommendation from advisors who were paid on commission; many of these products were either more expensive or risky than was absolutely necessary.
Last week, federal prosecutors in North Carolina brought charges against Stephen C. Peters, the latest alleged Ponzi operator to hit the headlines. Peters has been charged with diverting more than $4.4 million of retirement savings from elderly investors. Rather than actually invest their money, Peters used it to remodel a ranch in North Carolina, purchase fine art, build a vacation home in Costa Rica, and buy horses.
Each month and again on a quarterly basis, the agency that regulates the financial industry, FINRA (Financial Industry Regulatory Authority), produces a detailed report that runs down all disciplinary actions recently taken against brokerage firms and brokers. This long list of alleged wrongdoing and misconduct reads a lot like a police blotter. We strongly encourage any investor who suspects their broker and/or broker-dealer of having lost them money on dubious terms to at least skim this report to see if you recognize any names, schemes, products, or securities.