It’s an all too common occurrence that seems to be happening more and more. Retirees living on fixed incomes being persuaded by so-called investment professionals into parting with their hard earned retirement savings for “better” investments which allegedly provide both high income and safety of principal. What wishful thinking! The fact is such investments do not exist and those who peddle such investments should be closely scrutinized.

Before investing or otherwise doing business with a financial professional do your homework. This means check the following:

Make Sure They Are Licensed.

It’s against the law to sell securities without a license so make sure the person you are dealing with is properly licensed. Your professional should be licensed with the Securities Exchange Commission (“SEC”), Financial Industry Regulatory Authority (“FINRA”) and their state securities commission. You can verify licenses by calling your state securities regulator.

Check Their Disciplinary History.

Because financial professionals (like lawyer’s I suppose) are a dime a dozen, make sure the person with whom you are dealing does not have a history of cheating customers or other regulatory infractions which suggest a lack of trustworthiness. This information, like the licensing records may be obtained by calling your state securities regulator or by calling FINRA at (800) 289-9999. Information may also be obtained on the internet at www.FINRA.org. Records relating to brokers who have been out of the securities industry for more than two (2) years may only be obtained from your state securities regulator however as FINRA will not provide information relating to representatives who have been out of the business for more than two years. Lastly, make sure when you are requesting such information that you obtain records for both the broker you are considering doing business with and as well as the brokerage firm with which he or she is affiliated. Just because your potential broker may have a clean disciplinary history does not mean that the firm does- so check both.

Make Sure The Firm With Which You Are Dealing Either Has Insurance Or Assets Sufficient To Cover Their Mistakes.

Would you undergo surgery from a Doctor who you knew did not have malpractice insurance? Of course not! Then why would you put the fate of your financial future or a significant amount of your savings into the hands of a so-called financial professional who does not have the financial wherewithal to take responsibility for their mistakes. Before investing ask for either a copy of your financial professional’s insurance declaration page or a copy of the brokerage firm’s financial statement.

Retirees who have sustained investment losses should ask themselves the following:

  • Do I understand the investments I’ve purchased?
  • Are the investments too risky?
  • Were all the risks of the investment(s) disclosed to me prior to purchase?
  • Did my broker obtain my permission before each transaction?
  • Does there seem to be a lot of activity in my accounts?If you answered yes to any of these questions and sustained losses then you may have claims worth pursuing against the individuals and firm handling your accounts.


Investors who have lost money as a result of investments which were improperly recommended and/or sold by their investment professionals can sue to recover their investment losses.

Unlike most lawsuits, securities disputes with stockbrokers and brokerage firms are resolved in arbitration before arbitration panels appointed by the Financial Industry Regulatory Authority. (“FINRA”) and the New York Stock Exchange (“NYSE”). Arbitration is typically cheaper and faster than going to court and most cases are typically resolved within nine (9) to thirteen (13) months from the date of filing.

The following is a listing of securities regulators who can provide you with licensing and/or disciplinary information regarding financial professionals:

Arizona Corporations Commission, Securities Division
Telephone: (602) 542-4242

California Corporations Commission, Securities Division
Telephone: (866) 275-2677

Colorado Corporations Commission, Securities Division
Telephone: (303) 894-2320

North American Securities Administrators Association
Telephone: (202) 737-0900

Securities and Exchange Commission

Financial Industry Regulatory Authority
Telephone: (800) 289-9999