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 with over 20 years of representing individuals who have lost money due to the negligence of investors and brokers.
Hugh is a past President of the Public Investors Arbitration Bar Association (PIABA), an international legal association composed of practitioners who represent investors in disputes with the securities industry. He was also just re-elected to PIABA’s Board of Directors, where he has served as a director since 2011.
