Whether you work with a broker or advisor or you trade on your own, you should always monitor your investments. By keeping an eye on your investments, you can prevent minor mistakes from turning into big problems. You can protect yourself by taking the following steps.
1. Read and keep all documents that you receive from your broker, mutual fund, or investment advisor. Check to make sure your confirmations and account statements are accurate.
2. Keep good notes of communications with your broker or advisor. Taking notes when you're talking to your broker or advisor will help if there is a problem.
3. Get all confirmations and account statements sent directly to you. If you can't look after your own investments, get copies of these documents sent to someone you trust, such as a family member, lawyer, or accountant so that there is always a pair of independent eyes looking after you.
4. If you don't get account statements or confirmations, follow up. You have a right to this information. If you are not receiving these documents on a regular basis, that could be a sign of trouble.
5. Ask questions about any information you receive about your investments. If you don't understand something, ask questions. If investments that you did not authorize appear on your confirmations or account statements, contact your broker or advisor at once. Don't wait to see how the investments perform.
6. Even if you don't trade online, consider getting online access to your account. Online access to your account allows you to review your account whenever you want. You can verify information that you received from your broker or advisor or in your confirmations or account statements. You also may be able to request that your confirmations and account statements be sent to you via email.
7. Do not make checks or other payments payable to your broker, advisor, or another individual for an investment. In most cases, money should be sent only to your brokerage firm, its clearing firm, or another financial institution.
8. Meet with your broker and visit the firm, if possible. Investments are a major financial undertaking and should be afforded the same degree of investigation and caution as any other major purchase you might make.
9. Conduct independent research on your investments. Ideally, you should independently verify information by thoroughly reading prospectuses, research reports, offering materials, annual reports (Form 10-K), quarterly reports (Form 10-Q), and other filings that a company makes with the SEC. SEC filings, such as Forms 10-K and 10-Q, can be accessed on the SEC website.
10. Periodically review your portfolio. Make sure the securities in your account still meet your investment objectives. Also make sure you understand and are comfortable with the risks, costs, and liquidity of your investments. As part of this review, you may want to check the information on file at your brokerage firm regarding your accounts, such as new account agreements, margin account agreements, option account agreements, discretionary account agreements, and any correspondence to you. You have a right to know what is on file about you, and the firm's records must accurately reflect important information about you such as your age, income, net worth, financial status, long-term goals, and investment objectives.
What to do if you have a problem
If you believe you have been wronged or see a mistake in your account, act quickly. Immediately question any transaction or entry that you do not understand or did not authorize. Don't be timid or ashamed to complain. The securities industry needs your help so it can operate successfully. Here are the steps you should take.
- If you think it's a minor mistake, talk to your broker. This may be the fastest way to resolve the problem.
- If you can't resolve the problem with your broker or you believe your broker engaged in unauthorized transactions or other serious misconduct, report the matter to the firm's management or compliance department in writing.
- If you and your firm still can't resolve the problem, contact us. You can file a complaint using our complaint form. If you are seeking to recover money, you may want to consider arbitration or mediation, which are processes for settling disputes outside court. FINRA Dispute Resolution has numerous resources for parties, including:
- Information on how an investor can start the arbitration process.
- A guide for simplified arbitration procedures (PDF 340 KB). If the amount of the claim is $50,000 or less, unless the investor requests a hearing, the claim will be decided solely based on the parties' written submissions.
- A PDF, "What Investors Can Expect from FINRA's Dispute Resolution Process" (PDF 95 KB), which explains the arbitration process in plain English.
- Links to resources to help you find an attorney. Several law schools in California, Florida, Illinois, Massachusetts, New York, New Jersey, Pennsylvania and Washington, D.C., provide legal representation to help parties who have smaller claims and who are unable to hire a lawyer.
- Information on expedited proceedings for investors who are seriously ill or over age 65.
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