How to check if a broker is legit and properly registered

To check if a broker is legit in the US, look up the person and the firm yourself, by name, on FINRA BrokerCheck and on the SEC's Investment Adviser Public Disclosure site (adviserinfo.sec.gov). In the UK, search the FCA Firm Checker or the Financial Services Register, and then the FCA Warning List of unauthorized firms. These are free searches that take five minutes. If you get stuck in the UK, the FCA's consumer helpline answers on 0800 111 6768.

The underlying rule is simple: only firms and people listed on the official registers can sell you investments or manage your money. What the firm's website, certificate or salesperson says doesn't count. What counts is what the register says.

Step 1: look up the broker on FINRA BrokerCheck

BrokerCheck is FINRA's free tool for researching the professional background of brokers, brokerage firms and investment adviser firms. FINRA is the self-regulatory organization that oversees US brokerage firms, and the data comes from the industry's official registration and licensing database.

1. Open BrokerCheck by typing the address yourself, never from a link the firm sent you.
2. Search for the individual and for the firm, by name or by the CRD number they give you. Try both the brand name and the legal name (the one ending in “Inc.,” “LLC” or “Ltd”).
3. Open the profile and read the registration history (which firms the person works or has worked for), employment history for the last 10 years, qualifications (current registrations, licenses and exams passed) and, above all, the disclosures: customer disputes, disciplinary events and certain criminal and financial matters.
4. Compare the profile's details (address, website, phone number) with the ones you've been given. If they call you from a different number or send you to a different website, be suspicious: scammers often copy the name of a real firm.

Step 2: check investment advisers on the SEC's IAPD

Someone who charges you for advice or manages your portfolio is usually an investment adviser, registered with the SEC or with a state. Their public record is on the SEC's Investment Adviser Public Disclosure site, IAPD. You can also check an investment professional from the SEC's Investor.gov.

1. Search IAPD for the firm and for the individual adviser.
2. Check that the firm is registered, and with whom, and read its filings and any disclosures.
3. A firm can be registered as an adviser and not as a broker, or the other way round. Make sure the service you're being sold fits what the register shows.

Smaller advisers are registered with their state securities regulator rather than with the SEC, so if you can't find someone, check with the regulator in your state before you conclude anything.

If what you're being offered is a bank deposit or a savings account, look the bank up on the FDIC's BankFind, which lists insured US banks.

Step 3: check the FCA Register and Warning List (UK)

Almost all financial services firms in the UK must be authorized or registered by the FCA.

1. Go to the FCA Firm Checker, the FCA's newer consumer tool, or to the full Financial Services Register, by typing the address yourself. The FCA itself insists on this: never click links in emails or on company websites.
2. Search for the firm and check that it's authorized and has permission for the service it's offering you.
3. Make sure the firm reference number (FRN) and contact details you've been given match those on the register. Some scammers pretend to be authorized firms (the FCA calls them “clone firms”), so always contact the firm using the details on the register. If there are no contact details, or the firm says they're out of date, call the FCA on 0800 111 6768.
4. Search the FCA Warning List for the firm's name and also its website, because many unauthorized firms change their brand and keep their domain, or the other way round.

If you're being offered crypto, note that the Firm Checker doesn't show the FCA's published restrictions on crypto activities: those are on the full Financial Services Register. And being authorized doesn't automatically mean FSCS compensation will apply if something goes wrong; the FCA recommends checking that separately.

What each result means

One last nuance: being registered doesn't make an investment good or safe. It means there's a regulator you can complain to. The product's risk is still yours.

If you live somewhere else

Every country has its own regulator and register. Check any broker or platform there, even if it claims to be authorized in the US, the UK or Europe: in Canada, CIRO; in Australia, ASIC. A firm authorized in one country isn't automatically authorized in another. If it deals with you, it should be on the register where you live.

The same trick, a century ago

Checking the regulator sounds like modern red tape, but the trap it prevents is old. Allen Stanford sold certificates of deposit from his bank in Antigua, out of reach of his clients' regulators. They paid close to twice the interest of a US bank, and Venezuela was the hardest-hit country. We tell the story in the Stanford case: its Law of Deception No. 7 says, “The saver's fear is the con man's capital.”

A century earlier, in 1822, Gregor MacGregor sold bonds in London from the “government of Poyais,” a country that didn't exist. It had a flag, a currency and a printed guidebook. Nobody asked an independent source. Today that source exists, and it's free: the register. We explain it in the Poyais case.

Signs you shouldn't go any further

• They give you their registration number but don't want you to look it up “because the official site is slow.”
• They claim to be authorized by a foreign body you can't check or that doesn't exist.
• They contact you on WhatsApp, Telegram or social media without your asking.
• They ask you to pay into a personal account, in cryptocurrency or in another country.
• They promise high returns with no risk. The full list is in how to spot a scam, and the checklist before investing has the twelve questions to ask yourself.

If something doesn't add up, also read our guide to investment fraud and check with the regulator before you pay anything. It's free.