Why Are CRD Numbers Important?
Did you know that if your broker or financial adviser has prior complaints
or disciplinary actions, they may be listed in a public record database
you can access online in seconds? For the past 15 years, we have been
helping investors who have claims against their financial advisers for
fraud and other misconduct. One of the many tools we use regularly to
check on brokers’ background information is a very easy and very
effective one that not a lot of people actually know about.
We repeatedly recommend individual investors to do their research before
handing over their life savings to an investment professional. Just a
little extra time invested in research can go a long way in reducing the
chances of becoming a victim of investment fraud. If you’re not
sure where to start, keep in mind that a big part of that research is
checking up on your broker or brokerage firm so that you know you are
dealing with someone who is properly registered and does not have a history
of significant disciplinary actions or complaints.
Every stock broker licensed to sell securities in this country has what
is called a CRD number. CRD stands for Central Registration Depository which is a database that
holds information about brokers and brokerage firms maintained by the
Financial Industry Regulatory Authority, FINRA. FINRA is a non-governmental
regulator for all securities firms in the United States. FINRA is subject
to the oversight from the Securities and Exchange Commission, the SEC,
which is the government agency that serves as the ultimate regulator of
the securities industry.
Although the CRD report is not all-inclusive and can sometimes be incomplete,
it does include certain information about licensing, registration, professional
background, complaints, and disciplinary actions. From the time they register
and throughout their careers in the securities industry, brokers and brokerage
firms must inform FINRA if certain events occur. These events can include
regulatory actions, criminal convictions, and customer complaints. Every
time an update is sent to FINRA, it should end up on the broker’s
You can use a broker’s CRD number to confirm whether your broker
is registered in your state, learn what licenses they possess, which brokerage
firms they are registered with, and to find out if there are customer
complaints against that representative or his or her brokerage firm. This
database also has qualification and additional employment information.
There are some things the CRD report will not tell you. For example, some
information is removed after a certain time period such as bankruptcies
over 10 years.
It’s also possible that a broker has worked in other parts of the
financial services industry, for example, insurance or banking. The CRD
report may not have information about those industries. Also, there is
a process available to brokers where they can have customer complaints
removed, a process called expungement. So, it may be that a broker may
have had prior customer complaints, but they may not show up on the report
if the broker was successful in having the complaints expunged.
And although brokers and brokerage firms are required to update their professional
and disciplinary information, generally within 30 days of an event happening,
the CRD report does not have information until it is reported to FINRA.
So there may be instances where certain events go unreported and therefore,
would not appear on the CRD report. To obtain the report, it’s easy.
Use the link on our website to go to FINRA’s Broker Check. Click
the start search button, review and agree to the terms and conditions,
and click continue.
Type in your broker’s name and click start search. Locate your broker
or firm in the search results and click on his or her name. You should
now be able to view your broker’s detailed report in a PDF form.
Although we often stress looking up your individual broker, it can also
be helpful to look up information about the brokerage firm itself, particularly
if the broker you may be working with is registered with an independent
or small brokerage firm. Searching a firm’s name, you can access
information about the business in general, licensing and registration,
who owns the firm, any history of changes in names and / or ownership,
and disciplinary actions and securities arbitration decisions against the firm.
I encourage you to explore this website and learn more about the regulation
and reporting of brokers and brokerage firms. If you would like to learn
more about how our firm may be able to help you or someone you care about,
please call the toll-free number or submit the online form.