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The SEC and FINRA Got Your Back

The Securities and Exchange Commission and FINRA, the Financial Industry Regulatory Authority, are two major oversight and regulatory authorities governing investments for U.S. markets.

SEC FINRA got your backAccredited Investor Markets always advises investors to conduct their own due diligence before moving ahead with any type of investment, but knowing where to begin can feel daunting. Here is some AIMkts-approved reading for taking the first steps conducting your own diligence about potential investment advisors:


Select an Investment Professional – Finding the right financial advisor or investment professional is crucial. FINRA’s BrokerCheck “is a free tool that allows investors to check the professional background of brokerage firms and brokers currently or formerly registered with FINRA or a national securities exchange, as well as current or former investment adviser firms and representatives. BrokerCheck information is drawn from filings by regulators, firms and investment professionals. It includes current licensing status and history, employment history and, if any, reported regulatory, customer dispute, criminal and other matters.”

Things BrokerCheck can help investors do:

  • Search for information about brokers and brokerage firms;
  • Search for information about investment adviser firms and representatives;
  • Obtain online background reports, if available;
  • Link to additional resources such as educational tools for investors.

(Read here for information on the three types of financial advisors)

The SEC provides a similar service here.

What hoops do advisors need to jump through to stay in the good graces of regulators? Here’s a sampletoo:

1) Form ADV (read more here) “the uniform form used by investment advisers to register with both the Securities and Exchange Commission (SEC) and state securities authorities. The form consists of two parts. Part 1 requires information about the investment adviser’s business, ownership, clients, employees, business practices, affiliations, and any disciplinary events of the advisor or its employees. Part 1 is organized in a check-the-box, fill-in-the-blank format. The SEC reviews the information from this part of the form to process registrations and to manage its regulatory and examination programs.”

2) IAPD – Similarly, all information put onto Form ADV is available here, as an Investment Advisor Public Disclosure (IAPD), a database that provides instant access to registration documents filed by more than 25,000 SEC- or state-registered investment advisers. IAPD provides access to Form ADV filings made by investment adviser firms that register electronically using the Investment Adviser Registration Depository (IARD). IAPD also provides access to registration information filed with the states by investment adviser representatives (certain individuals that are employed by an investment adviser).

For a more in depth explanation, click here to get a breakdown on what it all means. Full of additional resources, reports and information, the SEC puts a number of due diligence tools at investors’ disposal.

For an array of plain English articles on investor protections, click here.

For an expanded discussion of this topic, click here for “Investor Fraud Protection: Who’s Got Your Back?”

About The Financial Poise Editors

Financial Poise provides relevant, plain-English intelligence and continuing education for investors, private business owners and executives.

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