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Rob Wells, former Wall Street Journal/Dow Jones newswires deputy chief, presents "Investigating Stockbrokers and Financial Advisers," a free, one-hour webinar hosted by the Donald W. Reynolds National Center for Business Journalism. For more information about training for journalists, please visit http://businessjournalism.org.
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Title Slide Inves&ga&ng Stockbrokers & Financial Advisers
Poll Ques&on #1 Have you researched a stock broker’s records?
• Yes • No
• Unsuitable Investments
• Churning • 10b5 • Breach of Fiduciary Duty
Photo by Flickr user Victoria Reay
Red Flags
Research Brokers, Advisers FINRA BrokerCheck -‐-‐Records on 637,000 current and former professionals, 4,700 firms.
SEC’s Investment Adviser Public Disclosure (IAPD) -‐-‐25,000 professionals
Cer&fied Financial Planner Board of Standards Inc. (CFP) -‐-‐69,000 professionals
FINRA BrokerCheck FINRA (Financial Industry Regulatory Authority): Industry group that licenses and polices stock brokers. FINRA: An SRO. Works with and is overseen by SecuriVes and Exchange Commission
FINRA BrokerCheck Quick Ques&on: Ever heard of CRD? Type Y/N or the defini&on Data derived from CRD: Central RegistraVon Depository Launched 1981
First Screen
Star&ng Your Search
Having a CRD number speeds your search. CRDs available on complaints, arbitraVon records
Click for person
Get Full Name, Middle Ini&al, Etc.
Get Full Name of Your Broker. Thousands of people in database, may take Vme to find right person. Filter with Zip Code
Quick Chat: IdenVfy the RED FLAG in this filing. Answer: NOT REGISTERED. WHY?
Your Turn
Time for some repor&ng…
Search: “Bernard Madoff”
Go to a separate tab on web browser and pull up this link:h_p://www.finra.org/Investors/ToolsCalculators/BrokerCheck/
Photo by Flickr user P
etezin
The document
Which secVon has the juiciest details? • Report Summary • Broker QualificaVons • RegistraVon and Employment
History • Disclosure Events
Poll Ques&on #2
For Firms: • Overview of the firm, and ownership • History, including any mergers or name changes • Summary of firm’s operaVons, list of fines, regulatory acVons, arbitraVon awards For Individuals: • Broker credenVals, current registraVons, licenses and exams • Employment history for the past 10 years • Any customer disputes or regulatory events on the broker’s record.
Key Items on CRD Reports
Employment History
Details of Ac&on
Get source material
Details of Case
Quick Chat Ques&on Type a word or phrase into the chat box: Describe other ways to use
Broker Check as a repor&ng tool.
Backgrounding Source: The Washington Post
Contact Former Co-‐Workers: Work History
Double Check BrokerCheck: Full-‐Text of Arbitra&on Filings:
hep://finraawardsonline.finra.org/search.aspx? -‐-‐Material linked in BrokerCheck but worth searching.
Finra Disciplinary Ac&ons Database (FDA): hep://disciplinaryacVons.finra.org/
-‐-‐Material summarized in BrokerCheck, access to raw complaints
BrokerCheck to Cover Poli&cs
Chat Box Ques&on: Poli&cians Who Were Brokers?
Your Turn: Search “Jon Corzine”
FINRA: Not Perfect!
Red Flags • ArbitraVon cases. What
happened? • Employment history.
RegistraVon gaps; where were they?
• Brokers can peVVon to remove
arbitraVon cases.
Photo by Flickr user Victoria Reay
Investment Adviser Public Disclosure
hep://www.adviserinfo.sec.gov/IAPD/Content/IapdMain/iapd_SiteMap.aspx
What Is An Investment Adviser? • An arbitrary term for a money manager • Same as a financial adviser • A unlicensed Wall Street person • All of the above • None of the above
Poll Ques&on #3
Regulated by SEC or states Dodd-‐Frank Act: Boosts states' role in regulaVng advisers • States regulate advisers handling between $25 million and $100
million of assets under management. • SEC oversees handling assets of $110 million • Both can be found in Investment Adviser Public Disclosure
database.
Investment Advisers
Form ADV Main Disclosure Form for Investment Advisers • Part 1: Summary of adviser's business, complaints from customers. • Part 2: Brochure to clients , details adviser’s business pracVces, fees, conflicts of interest, and disciplinary informaVon
State securi&es regulators North American Securi&es Administrators
Associa&on • Always worth checking with state regulators • Great way to monitor local and naVonal trends
State Enforcement
hep://www.nasaa.org/regulatory-‐acVvity/enforcement-‐legal-‐acVvity/enforcement-‐directory/
NYT story on LPL Financial -‐-‐ Uses state regulators as sources
hep://nyV.ms/14PiIdR
Cer&fied Financial Planners • CFP ® designaVon • Must pass series of exams • Subject to oversight of CerVfied Financial
Planners Board • Investor complaints can lead to CerVfied
Financial Planner revocaVon
CFP Board website lists revoked planners by state
Search for a Cer&fied Financial Planner
hep://www.cfp.net/uVlity/verify-‐an-‐individual-‐s-‐cfp-‐cerVficaVon-‐and-‐background
Example of Disciplinary Record
Chat Box: Number of CFP RevocaVons in Maryland?
hep://www.cfp.net/about-‐cfp-‐board/ethics-‐enforcement/disciplined-‐individuals-‐by-‐state
Your Turn
Alphabet Soup: Financial Professional Titles
“The requirements for obtaining and using these &tles vary widely, from
rigorous to nothing at all.” -‐-‐ SEC
hep://www.finra.org/Investors/ToolsCalculators/ProfessionalDesignaVons/AccreditedDesignaVons/
Rob Wells University of Maryland, Philip Merrill College of Journalism robwells@umd.edu
Ques&ons?
Photo by Flickr user Xurble
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