investigating stock brokers, investment advisers and financial planners by rob wells
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Title Slide Inves&ga&ng Stock Brokers, Investment Advisers & Financial Planners
Wells Rob
Adjunct Faculty, University of Maryland, Philip Merrill College of Journalism. Ph.D. student Reynolds VisiBng Professor of Business Journalism, University of South Carolina, Columbia. Former Deputy Bureau Chief, Dow Jones/Wall Street Journal, Washington, D.C. Reporter for Dow Jones, Bloomberg, The Associated Press
What You Will Learn: • Find penalBes, employment histories of
financial professionals using free databases.
• Review how the SEC, states and industry groups do and don’t police Wall Street; access to their invesBgaBons.
• Find “red flags,” such as “10b5” fraud and unsuitable investment cases.
Research Brokers, Advisers FINRA BrokerCheck -‐-‐Records on 1.3 million current and former professionals, 17,400 firms.
SEC’s Investment Adviser Public Disclosure (IAPD) -‐-‐441,000 professionals, 45,700 firms
Cer&fied Financial Planner Board of Standards Inc. (CFP) -‐-‐69,000 professionals Free Portals to research your stories. Use any computer with Internet access. No special so\ware or database knowledge needed.
FINRA BrokerCheck FINRA (Financial Industry Regulatory Authority): Industry group that licenses and polices stock brokers. Data derived from CRD: Central RegistraBon Depository. -‐-‐Launched 1981 FINRA: An SRO. Works with and is overseen by SecuriBes and Exchange Commission
First Screen
Star&ng Your Search
Having a CRD number speeds your search. CRDs available on complaints, arbitraBon records
Click for person
Get Full Name, Middle Ini&al, Etc.
Get Full Name of Your Broker. Thousands of people in database, may take Bme to find right person. Filter with Zip Code
Robot
Your Turn
hOp://www.finra.org/Investors/ToolsCalculators/BrokerCheck/
Search: “Bernard Madoff”
hOp://www.finra.org/Investors/ToolsCalculators/BrokerCheck/
Photo by Flickr user P
etezin
The document
For Firms: • Overview of the firm, and ownership • History, including any mergers or name changes • Summary of firm’s operaBons, list of fines, regulatory acBons, arbitraBon awards For Individuals: • Broker credenBals, current registraBons, licenses and exams • Employment history for the past 10 years • Any customer disputes or regulatory events on the broker’s record.
Key Items on CRD* Reports
*Central RegistraBon Depository; each broker and firm has a CRD number.
Employment History
Summary of Regulatory Ac&ons, Status
Details of Ac&on
Get to source material
Details of Ac&on
Get source material
Backgrounding Source: The Washington Post
Contact Former Co-‐Workers: Work History
• Unsuitable Investments • Churning • 10b5 • Breach of Fiduciary Duty Photo by Flickr user Victoria Reay
Red Flags
Use BrokerCheck to Cover PoliBcs
Your Turn
Search: “Jon Corzine”
hOp://www.finra.org/Investors/ToolsCalculators/BrokerCheck/
Photo by Flickr user P
aul Low
ry
Terms – Jargon Buster hOp://www.finra.org/web/groups/industry/@ip/@comp/@regis/documents/
appsupportdocs/p116979.pdf
Ques&ons about BrokerCheck? • Nancy Condon – 202-‐728-‐8379 – nancy.condon@finra.org • George Smaragdis – 202-‐728-‐8988 – george.smaragdis@finra.org • Michelle Ong – 202-‐728-‐8464 – michelle.ong@finra.org
Investment Adviser Public Disclosure
hnp://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx
Who Regulates Advisers? Dodd-‐Frank Act: Boosts states' role in regulaBng advisers • States regulate advisers handling between $25 million
and $100 million of assets under management. • SEC oversees handling assets of $110 million • Both can be found in Investment Adviser Public
Disclosure database.
hnp://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx
Form ADV Main Disclosure Form for Investment Advisers • Part 1: Summary of adviser's business, complaints from customers. • Part 2: Brochure to clients , details adviser’s business pracBces, fees, conflicts of interest, and disciplinary informaBon
Red Flags • ArbitraBon cases. What
happened? • Employment history. RegistraBon
gaps; where were they? • Brokers can peBBon to remove
arbitraBon cases.
Photo by Flickr user Victoria Reay
Ques&ons about Investment Adviser Public Disclosure?
SEC Office of Investor EducaBon and Advocacy 1-‐800 SEC-‐0330
State securi&es regulators North American SecuriBes Administrators AssociaBon • Always worth checking with state regulators • Great way to monitor local and naBonal trends
State Enforcement
hnp://www.nasaa.org/regulatory-‐acBvity/enforcement-‐legal-‐acBvity/enforcement-‐directory/
A1 NYT story on LPL Financial -‐-‐ Uses state regulators as sources
hnp://nyB.ms/14PiIdR
Cer&fied Financial Planners • CFP ® designaBon • Must pass series of exams • Subject to oversight of CerBfied Financial
Planners Board • Investor complaints can lead to CerBfied
Financial Planner revocaBon
CFP Board website lists revoked planners by state
hnp://www.cfp.net/about-‐cfp-‐board/ethics-‐enforcement/disciplined-‐individuals-‐by-‐state
Search for a Cer&fied Financial Planner
hnp://www.cfp.net/uBlity/verify-‐an-‐individual-‐s-‐cfp-‐cerBficaBon-‐and-‐background
Example of Disciplinary Record
CFPs and `Anonymous Case Histories’ Can Be Linked to Public Sanc&ons
Check Disciplined CFPs in NY, NJ, CT
hnp://www.cfp.net/about-‐cfp-‐board/ethics-‐enforcement/disciplined-‐individuals-‐by-‐state
Your Turn
Ques&ons about Cer&fied Financial Planners? Dan Drummond 202-‐550-‐4372 ddrummond@cfpboard.org
Rob Wells University of Maryland, Philip Merrill College of Journalism robwells@umd.edu
Ques&ons?
Photo by Flickr user Xurble
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