The North American Securities Administrators Association (NASAA), the oldest international investor protection organization, is offering retail investors various online educational resources in recognition of Financial Literacy Month. For 2022, a series of investor advisories are being highlighted, including the NASAA’s most recent advisory concerning reassigned investment accounts (the Advisory). The NASAA is a North American association of securities administrators founded in 1919 that, among other things, seeks to combat investment fraud through investor education and awareness initiatives.
The Advisory provides practical tips for investors facing reassignment of their investment accounts to another stockbroker or investment adviser in the case of an existing broker’s or adviser’s departure. Foremost for the investor is understanding how and why the broker or adviser left. The reasons may be as simple as relocation or retirement. Other reasons, such as termination, may merit further investigation. The firm may provide the investor with notice of the departure, and the timing, manner, and level of detail of the notice will vary among firms.
Each firm will have its protocols in the case of a broker’s or adviser’s departure based, in part, on whether the departure was voluntary or involuntary. For example, the firm may or may not provide new contact information to the customer. The firm may also have policies as to whether the broker or adviser may communicate with the former customer. In addition, the firm should clearly communicate how it will service the investment account, including how and to whom questions and trade instructions are directed. It may be the case that the account is reassigned to another broker or adviser, or the account may be serviced – temporarily or permanently – by a call center. In any case, it is important that the investor be proactive by contacting the firm if there are any questions or uncertainties, and to not make any assumptions as to how the account will be serviced.
Keep in mind, as well, that in some instances the departed broker or adviser may contact the investor directly. It is important that the investor understand the nature of the new firm, the services offered, the fee structure, and whether the firm would be an appropriate fit for the investor’s financial goals and objectives.
Finally, an investor can obtain additional information about a broker or adviser using publicly available online resources. The Financial Industry Regulatory Authority (FINRA) offers the BrokerCheck website, which provides a snapshot of a stockbroker’s registration status, licensing, employment history, regulatory actions, complaints, and arbitrations. Similarly, the U.S. Securities and Exchange Commission (SEC) offers the Investment Adviser Public Disclosure website, which provides information as to an investment adviser’s registration, employment, and disciplinary history. Both these websites also provide information about firms. Investors may also direct inquiries to their state securities regulator for additional information about a broker, adviser, or firm.
The attorneys at Giarrusso Law Group LLC have considerable experience with issues unique to the financial services industry, including federal and state regulation of brokers and advisers. If you have a question about this recent announcement or any other industry matter, you may contact us at (201) 771-1115 or info@gialawgroup.com for a free and confidential consultation.