Ask and Check

Many financial scams involve unlicensed individuals selling unregistered investments—ranging from stocks, bonds, and oil or gas deals to fictitious instruments, such as prime bank investments. That's why it is particularly important to "Ask and Check" about investments and investment professionals before you invest. Regardless of your trust or ties, or prior dealings with the professional, do your homework.

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 the Financial Industry Regulatory Authority (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
  • If you find the individual on BrokerCheck, click the "More Details" button below their name to view their summary report.
      more details button
    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
  • If you find the individual on BrokerCheck, click the "More Details" button below their name to view their summary report.
      more details button
    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:
      view detailed report button
    This will give you information on the individual’s employment history, qualifications, disclosure events and more.
Insurance Agent
  • 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.

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.