A few bad apples can indeed spoil the bunch. At least, that is the message that FINRA (the Financial Industry Regulatory Authority) recently sent by stating that it will expand its focus on rogue brokers who have worked with or associated with high-risk financial advisors.
Securities Industry Regulators Build Database of High-Risk Broker Network
Last year, FINRA introduced a new task force unit to keep an eye on high-risk or recidivist brokers. The unit has been hard at work identifying the few hundred bad brokers who pose the greatest threat to investors. FINRA has not released its definition of what a high-risk broker is, or how this can be quantified, but the organization has said that they take a number of factors into consideration, especially a broker’s employment history, customer complaints, and trading behaviors.
Now, FINRA is taking things a step further to stop rogue brokers from claiming yet more victims. The securities industry watchdog is busy creating a watchlist of brokers who may be linked to or associated with high-risk brokers. This network of high-risk financial advisors, FINRA has suggested, constituted the bad apples that spoil the bunch.
Investors Must Conduct Background Check on Financial Advisors
Investors may be shocked to discover that their broker, in whom they trusted so much, may be such a bad apple. In our experience with rogue brokers, the causes of action for which they are being litigated against are hardly ever the very “first offence.” Indeed, more often than not, the broker in question has a history of customer complaints, employment disputes or terminations, and even trouble with personal liens and taxes. Thus, we encourage every investor to check their broker’s history using FINRA’s comprehensive database on the financial industry, BrokerCheck. It is an invaluable resource and a protection against all those bad apples.
