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FINRA (Financial Industry Regulatory Authority) is the largest independent regulator for all securities firms doing buisness in the United States. Their chief role, in conjunction with the Securities and Exchange Commission (SEC) is to protect fairness of the US capital markets.

NUMBER OF BROKERAGE FIRMS IS SHRINKING
Posted by: Robert Rex
January 06, 2012

Recent statistics confirm that the number of brokerage firms in the country is shrinking. According to The Compliance Department Inc. , between May 2010 and May 2011, 336 broker-dealers notified FINRA that they were shutting down. Only 190 new firms were admitted by FINRA during that same time period. Projections suggest that this trend will continue for at least the next 3 years.

This comports with what we have seen in our representation of investors over the past year. Many of the companies we have pursued on behalf of our clients have chosen to withdraw from the industry rather than having an arbitration award they are unable to pay rendered against them.

Investors should be very wary of the brokerage firm they choose to entrust with their life savings. Contrary to popular notion, most firms do not have insurance and most small firms are so thinly capitalized that even a low six figure settlement  or award to an aggrieved investor is something they are not capable of satisfying.

When deciding whether to open an account with one of the lesser known brokerage firms, investors would be wise to do things:

  • Obtain the CRD on the broker to determine if he or she has prior disciplinary problems or customer complaints. This may be obtained by visiting the Broker Check page on the FINRA website.
  • Obtain a copy of the recent financials for the firm to assess their ability to be financially responsible.  This can be obtained by searching the SEC Edgar filing page for the name of the company, then finding the most recent SEC form X17A-5.

If you have questions about this or any other matter related to the handling of your brokerage account, call us at 561 391 1900 or email rhr@dmrslaw.com or visit our website www.dmrslaw.com .

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Robert H. Rex has been helping investors recover losses from stockbrokers, brokerage firms and investment advisers for over 20 years. We represent victims of fraud and misrepresentation nationwide as well as throughout the world. If you have a a question about losses in your account or how your account is being handled, please give us a call at 561 391 1900. There is no charge for the initial consultation. Visit our website for more information.

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