What To Do If Your Investment Professional Has a Customer Complaint on BrokerCheck

The BrokerCheck report will contain most complaints by customers against registered investment professionals. These investment professionals have to notify FINRA of customer complaints that allege misconduct related to the sale of financial products — even if the allegations are without merit.

Here are some things to look for when a customer complaint shows up in your investment professional’s history.

1. Is it the only complaint on the report? If not, are there other, similar complaints that suggest a pattern? It is helpful to consider how many complaints an investment professional has received and over what time period. Two complaints in a two-year career might be more cause for concern than two complaints in 30 years—but it’s important to review the details of each complaint, including its resolution, before drawing any conclusions.

2. How was the complaint resolved? An investment professional and their firm may decide that the customer’s complaint is unfounded and determine to “deny” the complaint. In such cases, the disposition on BrokerCheck will reflect “denied.” A customer may then decide to seek compensation for damages by filing a claim in arbitration. Alternatively, an investment professional and their firm may determine to settle a complaint by, for example, paying compensation to the customer. The existence of a complaint does not mean the investment professional did anything wrong. Similarly, a denial of wrongdoing by the investment professional does not always mean a complaint was unfounded.

3. If the complaint was settled, how much (if anything) did the investment professional contribute to the settlement? How does the settlement amount compare to the amount of damages originally claimed by the customer? A $1 million claim settled for $750,000 is likely to be very different from a $1 million claim settled for $25,000. The same considerations should be given to civil litigation and arbitration awards.

4. What are the specific allegations within the complaint?  It’s important to consider whether the claim alleges specific acts of misconduct by the investment professional (e.g., unauthorized trading), or the unexpected failure of a particular investment product. The unexpected failure or decline in value of a particular investment product could lead to numerous complaints tied to that product against an investment professional. Some customers might feel that the investment professional didn’t tell them all that they needed to know about that investment. But a slew of complaints doesn’t necessarily mean that the investment professional engaged in misconduct.

5. What does the investment professional say? When an investment professional reports a customer complaint, they are given an opportunity to provide comments about the matter. You might want to consider those comments as they can shed additional light on the nature of the complaint and provide some insight into the investment professional’s side of the story.

For investment advisers, you can check out the U.S. Securities and Exchange Commission’s Investment Adviser Public Disclosure, or IAPD, for more information.

If you’ve reviewed the background of a registered investment professional or investment adviser and still have questions, the best thing to do is simply to ask them — or their firm’s compliance department — about anything that concerns you. Don’t hesitate to ask questions before you entrust your money to someone.