Ask and Check (2024)

Check Out the Seller

If a salesperson is trying to sell you an investment, check them out by following these steps.

Step 1: Ask "Are you licensed to sell me this investment?"

Legitimate investment professionals—including registered financial professionals (also known as registered representatives), investment advisers and insurance agents—must be licensed with FINRA, the Securities and Exchange Commission (SEC) or your state securities or insurance regulator before they can sell you anything. If they say they aren't licensed, say good bye—and don't buy.

Step 2: Check.

If they say they are licensed, check them out as follows:

If They Say They Are a ...	Look Here	Helpful Hints
Registered Financial Professional	Visit FINRA BrokerCheck or call FINRA at (800) 289-9999. Also contact your state securities regulator. Check SEC Action Lookup tool for formal actions that the SEC has brought against individuals.	If you find the individual on BrokerCheck, click the "More Details" button below their name to view their summary report. The summary report provides information on the individual's employment history, qualifications, disclosure events and more. You can also download a detailed report on the individual. To interpret what you find, see FINRA BrokerCheck Tips below. Use both FINRA BrokerCheck and contact your state. There's helpful information in both places.
Investment Adviser	Visit FINRA BrokerCheck or call FINRA at (800) 289-9999. Or, visit the SEC's Investment Adviser Public Disclosure (IAPD)website. Also,contact your state securities regulator. Check SEC Action Lookup tool for formal actions that the SEC has brought against individuals.	If you find the individual on BrokerCheck, click the "More Details" button below their name to view their summary report. The summary report provides information on the individual's employment history, qualifications, disclosure events and more. You can also download a detailed report on the individual. To interpret what you find, see FINRA BrokerCheck Tips below. If you find the firm on IAPD, click on its name to view its Form ADV (the investment adviser registration form). For disciplinary information about the firm, scroll to the bottom of the page, and click "Item 11—Disclosure." If you find the individual on IAPD, click their name and click this button in the upper right side of the screen: This will give you information on the individual’s employment history, qualifications, disclosure events and more.
Insurance Agent	Contact your state's insurance commission—to find yours, visit the National Association of Insurance Commissioners or call (866) 470-6242.	Requirements and information available vary by state. Be aware that "captive" agents can sell only the policies and products their company offers. Independent insurance agents typically represent multiple companies.

Find out more about BrokerCheck and get tips on searching for individual or firms.

Check Out the Investment: Is It Registered with the SEC?

Take these steps to check whether a recommended investment is registered with the Securities and Exchange Commission (SEC):

Step 1: Ask the person offering the investment, "Is this investment registered with the SEC?"

If the answer is no, ask why the investment is not registered. Not all securities offerings must be registered with the SEC—such as those issued by municipal, state and federal governments. The SEC also provides exemptions for certain intrastate offerings and small public and private offerings under a rule known as Regulation D. For more information, read the SEC's Microcap Stock: A Guide for Investors.

Step 2: If yes, then use the chart below to help you check that this is in fact the case.

Where to Check	What You Get	Helpful Hints
SEC—EDGAR Company Search Call the SEC's Office of Investor Education and Advocacy toll-free at (800) SEC-0330 if you have trouble using EDGAR or have questions about a company or investment.	Free public access to corporate information, including registration statements, prospectuses, annual reports with audited financial statements on Form 10-K and quarterly reports on Form 10-Q. Information about recent corporate events reported on Form 8-K. Confirmation of whether a company is using an exemption under Regulation D.	Read the SEC's tips for researching investments using EDGAR and other tools. Be alert to changes in the company's name and trading symbol, reported through SEC Form 8-K. Check if the company is filing current reports by looking for a 10-K report within the past year.
Your State Securities Regulator	Information about the investment beyond registration status, such as whether a promotion appears in violation of state securities law.	Ask if your state regulator is aware of any problems associated with the company or the type of investment. You can also contact the North American Securities Administrators Association at (202) 737-0900.

Where to Check

What You Get

Helpful Hints

SEC—EDGAR Company Search

Call the SEC's Office of Investor Education and Advocacy toll-free at (800) SEC-0330 if you have trouble using EDGAR or have questions about a company or investment.

Free public access to corporate information, including registration statements, prospectuses, annual reports with audited financial statements on Form 10-K and quarterly reports on Form 10-Q.
Information about recent corporate events reported on Form 8-K.
Confirmation of whether a company is using an exemption under Regulation D.

Read the SEC's tips for researching investments using EDGAR and other tools.
Be alert to changes in the company's name and trading symbol, reported through SEC Form 8-K.
Check if the company is filing current reports by looking for a 10-K report within the past year.

Your State Securities Regulator

Information about the investment beyond registration status, such as whether a promotion appears in violation of state securities law.

Ask if your state regulator is aware of any problems associated with the company or the type of investment.
You can also contact the North American Securities Administrators Association at (202) 737-0900.

Keep in mind that registration with the SEC does not guarantee that an investment will be a good one or immune to fraud. Likewise, lack of registration does not mean the investment lacks legitimacy. The critical difference is the extreme level of risk you assume when you invest in a company about which little or no information is publicly available. SEC registration carries a number of advantages for investors, including disclosure of financial and other information that can help investors assess whether to invest in a company's securities.

To check out the registration of the following types of investments, follow these steps:

Mutual Funds

Visit the SEC's EDGAR Mutual Fund Search. If you find the mutual fund there, then it is registered with the SEC.

Variable Annuities

Variable Insurance Products

Visit the SEC's EDGAR Variable Insurance Product Search. If you find your variable annuity or other insurance product, then it is registered with the SEC.

Exchange-Traded Funds (ETFs)

Exchange-Traded Notes (ETNs)

Closed-end Funds

Visit FINRA Market Data. Click on the link that says Company Information in the far left column to search for your investment. If you find the ETF, ETN or closed-end fund on Market Data, it is registered with the SEC.

FAQs

How do I know if a financial advisor is legit? ›

Legitimate investment professionals—including registered financial professionals (also known as registered representatives), investment advisers and insurance agents—must be licensed with FINRA, the Securities and Exchange Commission (SEC) or your state securities or insurance regulator before they can sell you ...

How to know if an investment company is legit? ›

Use www.BrokerCheck.finra.org to check if a broker is a licensed or if someone has complained about them. Read about and understand any investment before you give someone your money.

How to know if a broker is legit? ›

FINRA: Another good source of information about brokers and their firms is the BrokerCheck website operated by FINRA, an independent, not-for-profit organization authorized by Congress to protect investors. Some states refer visitors to the FINRA for broker information.

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What is a CRD? ›

The Central Registration Depository (CRD) is a database maintained by the Financial Industry Regulatory Authority (FINRA) since 2007 for all firms and individuals involved in the U.S. securities industry.

How safe is your money with a financial advisor? ›

The Bottom Line

There is always going to be inherent risk in trusting your money with another person. Financial advisors are meant to take care of your money but it doesn't mean each and everyone will always have your best interest at heart.

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How do I know if a financial company is legit? ›

Legitimate lenders must be registered with consumer protection agencies such as the Consumer Financial Protection Bureau (CFPB) and hold various licenses to operate. If the lender can't verify its registration or license status, you're probably dealing with a scammer.

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How to spot a fake trading platform? ›

Look for online reviews on various platforms such as forums (Trustpilot as an example), social media, and trading websites. Be cautious of reviews that seem overly positive or negative, as they may be biased or manipulated.

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Can you check if a company is legit? ›

Because not all websites are equal (or legitimate), it's a good idea to review information from several different websites. You can also look up the company to review consumer complaints on the Better Business Bureau by searching for where the company is located or doing business.

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How do you know if an agent is legit? ›

Do they seem unprofessional or disorganized? If so, it's likely that this person is not who they say they are. If you have any doubts about an agent, you should always ask to see their license. This is something that any legitimate real estate agent will be able to provide without any hesitation.

How do I find a trusted broker? ›

You can check the broker's testimonials and reviews to determine if their services are reputable or not. You may also want to check if their reviews are honest or not. In addition to this, it's also wise that you check if the broker you've chosen is regulated or not.

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What does FINRA stand for? ›

The Financial Industry Regulatory Authority (FINRA) is an independent, nongovernmental organization that writes and enforces the rules governing registered brokers and broker-dealer firms in the United States.

Who gets a CRD? ›

A Broker CRD (Central Registration Depository) number is a unique identifier assigned to individual financial professionals registered with the Financial Industry Regulatory Authority (FINRA). It is an identification number for brokers, investment advisers, broker-dealers, and their firms.

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What is a broker code? ›

Introduction. A broker's CRD number is a unique identifier FINRA assigns to each registered person and entity. It's used to track their employment history, licensing, and disciplinary actions throughout their career in the financial industry.

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How to trust a financial advisor? ›

Always ask for (and verify) an advisor's specific credentials. Anyone who gives investment advice — which most financial advisors do — must be registered as an investment advisor with the SEC or the state if they have a certain amount of assets under management.

How to check if a financial advisor is a fiduciary? ›

Visit napfa.org to check their database. You can also research potential advisory firms through the SEC's adviser search tool. If the advisory firm is a federally Registered Investment Adviser, and thus a fiduciary, it will have what is called a Form ADV filing available to be viewed online.

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