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FINRA Issues Investor Alert
The
alert is designed to help guide investors through the key elements of their
account statements and trade confirmations. FINRA is reminding investors that
reviewing their account statements not only helps them stay on top of their
holdings, but also alerts them of errors, as well as broker or firm misconduct, such
as unauthorized trading or overcharging customers for handling
transactions.
“Investors whose portfolios have taken a hit might not be keen to open
their account statements, but investors should review their statements carefully—and
immediately call the firm that issued the statement about any fee they do not
understand or transaction they did not authorize,” said Gerri Walsh,
FINRA’s vice president for Investor Education. “Investors should also
review trade confirmations as soon as they receive them because a single
keystroke can make the difference between 100 and 1,000 shares.”
In most cases, brokerage firms are required to provide customers with quarterly
account statements and written notification of trade confirmations at or before
completion of a transaction. “It Pays
to Understand Your Brokerage Account Statements” details in plain
language the key elements of account statements and “red flags” that
can help investors spot and avert problems. Many account statements include an
investment objective that characterizes an investor’s strategy, such as
“growth” or “conservative.” Investors should ensure that
this description, as well as the account activity, accurately reflects their
goals.
Consolidated account statements, which provide customers with a single document
that combines information on most or all of their financial holdings regardless
of where those assets are held, are growing in popularity. Investors should
understand that these consolidated statements supplement, but do not replace,
the required brokerage account statement. Investors who receive both kinds of
statements should keep in mind that the official brokerage statement is used in
case of a dispute with the broker or firm.
“It Pays to Understand Your Brokerage
Account Statements” explains that trade confirmations disclose whether
your broker acted as an agent for you or whether the firm acted as a principal
for its own account. In equity transactions, if the firm acts as an agent, then
the firm must disclose the commission you were charged either on the
confirmation or upon request by you. If the firm acts as principal, it is
acting for its own benefit, and any markup or markdown or commission-equivalent
must be disclosed on the confirmation.
Investors who find inaccuracies or discrepancies on any of their statements
should contact their broker or firm as soon as possible, and if the problem is
not resolved, FINRA urges investors to file a complaint using FINRA’s online Complaint
Center.
“It Pays to Understand Your Brokerage Account Statements” is available here.