Many investors place significant trust in their financial advisor, assuming they are honest, competent, and acting in their best interest. But what happens when you discover that your advisor has a past disciplinary history with FINRA, the SEC, or another regulatory body? This revelation can feel alarming—and rightfully so. Past disciplinary actions can be a red flag indicating serious issues such as fraud, misrepresentation, unauthorized trading, or breach of fiduciary duty.
Past FINRA Disciplinary History Can Sometimes Predict Future Behavior
If you’ve uncovered this information, you are not alone—and you’re right to be concerned. At Bakhtiari & Harrison, we represent investors nationwide who have suffered financial harm due to misconduct by advisors with prior regulatory violations. Here’s what you should know—and what steps you should take—if your financial advisor has a disciplinary history.
Step 1: Confirm and Understand the Disciplinary History
The first step is to verify the nature and severity of your advisor’s past issues. You can access public regulatory records using these tools:
FINRA BrokerCheck: Offers a detailed report of any FINRA-registered broker’s employment history, licenses, customer complaints, regulatory actions, terminations, bankruptcies, and judgments.
SEC IAPD (Investment Adviser Public Disclosure): Provides background on SEC-registered investment advisors and firms, including disciplinary history records.
When reviewing these records, pay attention to:
Customer disputes or arbitration awards
Regulatory sanctions
Terminations for cause
Pending investigations or criminal matters
Not all disclosures are created equal. For example, a single dismissed customer complaint from 20 years ago may not be cause for alarm. However, multiple complaints, serious regulatory findings, or recent misconduct can be a sign of a pattern—and a potential threat to your financial well-being.
Step 2: Assess the Risk to Your Investments
Once you’ve confirmed that your advisor has been disciplined, evaluate whether their past behavior could affect your current financial situation. Ask yourself:
Has your advisor recommended high-risk or unsuitable investments?
Have you experienced unexplained losses or account activity?
Are there transactions you didn’t authorize?
Has the advisor failed to communicate clearly or transparently?
Some advisors with a history of misconduct continue to manage money with little oversight. If you see any current red flags, take immediate action. Even if the misconduct occurred in the past, it could signal a risk of future problems—or explain recent account issues you’ve already experienced.
Step 3: Request a Full Account Review
If you have any doubts about your advisor’s integrity, it’s wise to request a full account history and trade confirmations for review. Look for:
Frequent buying and selling (churning)
High-commission or complex products (like variable annuities or non-traded REITs)
Lack of diversification
Investments inconsistent with your stated risk tolerance or goals
If this review reveals suspicious activity, you may have grounds for legal action. A securities attorney can help evaluate whether your advisor violated industry rules or duties.
Step 4: Consider Moving Your Account
You are under no obligation to remain with an advisor who has a problematic record. In fact, staying with a previously sanctioned advisor may expose you to future losses—especially if their firm failed to supervise them properly.
If you are uncomfortable with your advisor’s past or present behavior:
Open a new account with a trusted firm
Transfer your assets in-kind to avoid triggering unnecessary taxes
Ensure all future communications and transactions are documented
When switching advisors, request a written explanation of any account fees, surrender charges, or restrictions that could affect the move.
Step 5: Contact a Securities Attorney
If you have lost money or suspect your financial advisor engaged in wrongdoing, consult a law firm that focuses on securities arbitration and investor protection. A qualified attorney can:
Review your investment history for red flags
Investigate whether your advisor or their firm violated FINRA or SEC rules
Determine if your losses are recoverable through arbitration or litigation
Guide you through the FINRA arbitration process
Many investors aren’t aware that financial advisors and their firms may be liable for misconduct even when the wrongdoing occurred years earlier—especially if it caused damages or involved deception, concealment, or unsuitability.
At Bakhtiari & Harrison, we represent clients across the country in claims involving financial advisor fraud, negligence, and regulatory violations. Our team can assess your case confidentially and help you understand your legal options.
Frequently Asked Questions
Can a financial advisor work with a disciplinary history?
Yes. A financial advisor can remain licensed to sell securities or offer investment advice even with a disciplinary history. However, they may be subject to heightened supervision by their firm or regulatory restrictions, depending on the nature of the violation.
Should I trust an advisor with past complaints?
It depends. A single, dated complaint that was denied or withdrawn may not indicate risk. But a pattern of complaints, especially involving the same type of misconduct, should not be ignored. Investors are advised to err on the side of caution.
Is the firm also responsible for the advisor’s misconduct?
Often, yes. Firms have a legal obligation to supervise their registered representatives. If the firm failed to detect or prevent misconduct—or hired an advisor with a known disciplinary history—it may be held liable for resulting investor losses.
What damages can be recovered?
Through FINRA arbitration, investors may be able to recover out-of-pocket losses, interest, attorneys’ fees, and—in some cases—punitive damages. Each case is different and should be evaluated on its own facts.
Final Thoughts: Protect Yourself Before It’s Too Late
Discovering your financial advisor has a disciplinary record can be unsettling. But ignoring it may put your investments at greater risk. If you’ve already suffered losses—or suspect you’ve been misled or taken advantage of—it’s critical to act quickly.
Time limits may apply to your ability to recover losses, and financial firms often use legal and procedural defenses to avoid accountability. That’s why it’s important to have a skilled legal team in your corner.
For more information or a confidential consultation with a FINRA securities attorney, contact Bakhtiari & Harrison today.