The fine came from the Financial Industry Regulatory Authority, which oversees roughly 4,550 brokerage firms, 163,500 branch offices, and 631,110 registered securities representatives. Within 30 days of learning about something that belongs on a broker's record, such as a customer complaint, an investigation, or arbitration, a brokerage must report that by updating its records with FINRA. Wells Fargo seems to have been very late in updating many of its broker registration forms.
Do your due diligence
It can often feel as if you're floundering about on your own when you're dealing with the financial world, but you're not. There are communities of like-minded investors, such as here in Fooldom, where you can learn and discuss.
When it comes to checking up on brokers, FINRA isn't the only game in town. The Securities and Exchange Commission maintains a searchable database of information on investment advisors. And just last month, the folks at BrightScope launched a financial advisor directory that aims to eventually offer much more information than FINRA does -- including broker performance records.
That can be a big boon for investors, because while it may be comforting to know that your broker hasn't been caught doing anything illegal, he may still be lousy at his job. Right now BrightScope offers more limited information, but it's still instructive for us as investors.
For example, BrightScope says that E*TRADE Financial's
As an investor looking at financial services companies as possible investments for your portfolio, this kind of information can also help you, showing where a firm is getting -- and can get -- its money.
The bottom line, though, is to not get too excited -- yet. There seem to be some kinks in BrightScope's system, which is drawing mainly from government filings. Widespread reports of errors have led BrightScope to permit advisors to revise some of their listed information. Thus, while I'm interested in perusing the listings, I'm holding out for more, and more accurate, data in the future. It's good to know that it's on the way.
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