Check out your securities broker

Earlier this week, the office of Mississippi Secretary of State Delbert Hosemann released information about a settlement with RBC Capital, finding that the company had sold securities in the state without properly registering with the Secretary of State’s office. As part of a settlement, the company agreed to change how it registers its brokers.

It’s easy to forget to check who’s handling your money. Often, people are fooled by scammers who claim to be able to guarantee specific returns, who have questionable credentials, or who are involved in shady practices. But there are some ways you can check them out.

Hosemann’s office ( can tell you whether the broker is properly registered, and they also have lots of good resources. The Financial Industry Regulatory Authority (FINRA) is a self-governance arm of the financial industry, and has the power to enact and enforce securities regulations, and regulates nearly 630,000 brokers. FINRA has a website feature called BrokerCheck, which allows you to check a broker’s record by name or firm.

FINRA also has some good advice about red flags which may indicate a scam. Here are some snippets from their brochure, “Fighting Fraud 101”:

The “Phantom Riches” Tactic – dangling the prospect of wealth, enticing you with something you want but can’t have.
The “Source Credibility” Tactic – trying to build credibility by claiming to be with a reputable firm, or to have a special credential or experience.
The “Social Consensus” Tactic – leading you to believe that other savvy investors have already invested.
The “Reciprocity” Tactic – offering to do a small favor for you in return for a big favor.
The “Scarcity” Tactic – creating a false sense of urgency by claiming limited supply.

Reputable brokers have no problem with your checking them out, and in fact should encourage you to do so. When it comes to your money, it’s worth the time.

(Originally published on on 11/6/13)


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