State governments generally have separate departments regulating securities and insurance. An article by Bruce Kelly in Investment News reminds us that when stockbrokers get tossed out of the securities industry for fraud or other sales abuses, they often keep their insurance licenses. This means that the agent selling you life insurance or annuities may be a crocodile who has been forced to relocate to a new lagoon.
How can you find out? Well, first, you can simply ask the agent if he or she sells or ever sold securities and, if so, whether his or her securities licenses are still active. But whether the answer is yes or no, you also should spend the few minutes it will take to search the FINRA BrokerCheck database. This resource will tell you whether your agent was or is a stockbroker and, more important, it will provide a complaint and disciplinary history. BrokerCheck isn’t perfect, but you still should be familiar with it. This, of course, is particularly true if you’re thinking of retaining a new stockbroker — but that’s a subject for another day.
Hugh Berkson is a Securities Attorney with McCarthy, Lebit, Crystal & Liffman, Co. LPA. Hugh is rated AV® Preeminent™ by Martindale-Hubbell®.
He obtained a business degree in Finance from the University of Texas at Austin in 1989, and is a 1994 graduate of Case Western Reserve University School of Law, where he was a member of the Order of the Barristers and received both the American Jurisprudence Award, (National Mock Trial) in 1993 and the Jonathan M. Ault Mock Trial Prize for 1993-1994.