In the United States, a financial broker must obtain a license before they can legally sell securities. Likewise, a brokerage firm must be properly licensed before it can operate in the securities industry.
What is a CRD Number?
Licensed brokers and brokerage firms all have a unique Central Registration Depository (CRD) number. This CRD number can be used by the public to search an online database containing detailed information about both individual brokers and financial firms. This database is referred to as BrokerCheck and is operated by the Financial Industry Regulatory Authority (FINRA).
Some of the key information that you will be able to find using a CRD number includes:
- A broker’s active and expired licenses;
- Information pertaining to their professional background;
- The history of complaints that have been filed against the broker; and
- Records of any disciplinary action that has been taken against the broker by authorities.
If you have accessed your broker’s CRD number, and you have found information that leads you to believe that you have been a victim of securities fraud, you need to speak to an experienced securities fraud lawyer immediately.
Your attorney will be able to comprehensively review your circumstances and determine precisely what needs to be done next to protect your legal rights and financial interests.
You Must Always Do Your Background Research
Before turning your hard-earned capital over to an investment adviser, it is imperative that you do your research into the individual and their brokerage firm. This research may save you a substantial amount of time and money in the long run. Indeed, even a small amount of research can go a long way towards protecting your from becoming a victim of securities fraud.
Of course, we understand that ‘doing research’ is a vague recommendation; for many people, ‘research’ may sound like an overwhelming task. Fortunately, there are now tools available that will dramatically simplify the research process. By getting your broker’s CRD number*, you will be able to use a free tool provided by the Financial Industry Regulatory Authority (FINRA) called BrokerCheck.
*Warning: If a broker refuses to provide you with their CRD number, do not invest your money with that individual. You have a legal right to that information, so if a broker is trying to block you for accessing your rights, it is likely that they have something to hide.
FINRA’s BrokerCheck Tool Can Be Used to Access Important Background Information
FINRA provides the free BrokerCheck tool to help investors gain easy access to all of the key background information regarding brokers and brokerage firms. After reviewing this background information, investors will better be able to make informed choices over who they trust with their money. BrokerCheck gives you results instantly, and it can be used from virtually any device that has internet capability.
The tool is extremely useful, and every investor should use it before making a major investment decision. That being said, it is also important to recognize that the information provided by BrokerCheck may not always be complete. Follow-up research may be necessary, especially in cases where BrokerCheck indicates that there is adverse information regarding a specific broker or brokerage firm.
Six Steps Process for Using BrokerCheck
Step 1: You can access the tool by going to brokercheck.finra.org.
Step 2: Choose to either start a search for an ‘individual’ or a ‘firm’, and agree to the terms and conditions.
Step 3: Input the broker or brokerage firm’s CRD number and run the search. To be clear, you can also run a search simply using a broker’s name and location. However, it is important to be extremely careful when running a search using a name.
Sometimes people change or modify their names or there are multiple brokers or firms with similar names. It is best to always confirm the CRD number to ensure that you are researching the correct individual or company.
Step 4: Locate the individual or firm in the search results and click on ‘more details’.
Step 5: From here, you will be able to review all the background information FINRA has on the broker or brokerage firm. This may include experience, employment records, licenses, industry exams passed, complaints and disciplinary history.
Do You Need Legal Assistance?
The securities fraud team at the Sonn Law Group can help. To request your free case evaluation, please do not hesitate to call our team today at 1-877-969-2412. We take all investment fraud cases on a contingency fee basis. This means that we do not charge upfront costs to take on your case. Instead, we recoup our fee when we win or successfully settle your claim.