How Much Investment Knowledge should My Stock Broker have?
Did you know that a brokerage firm has an ongoing duty to train its stock brokers to understand the products they sell, particularly complex products?
FINRA requires that each member establish and maintain a system to supervise the activities of each broker that is designed to achieve compliance with applicable securities laws and regulations, and with applicable NASD Rules.
FINRA has repeatedly advised member firms that their supervisory responsibility to provide training on investments is particularly acute with respect to complex investments. Specifically, FINRA has reminded member firms that education of brokers on complex products is “crucial.”
Training for all persons should emphasize that, due to the unique nature of products, many investors, especially retail investors, may not understand the features of the product, and may not fully appreciate the associated risks of investing in them. Moreover, in light of the fact that investors may be turning to these products as an alternative to traditional equity and fixed income investments, it is crucial for registered persons to have a full and balanced understanding regarding both the risks and the rewards of these products.
Keeping this in mind, your stock broker is expected to be able to answer any questions you may have about any particular investment product being presented to you.
Other posts from James Dunlap
