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What to Do When Your Stockbroker Is Being Investigated by the SEC or FINRA


Finding out that your stockbroker is under investigation by regulatory authorities like the Securities and Exchange Commission (SEC) or the Financial Industry Regulatory Authority (FINRA) can be alarming. As an investor, such investigations may raise concerns about the safety of your investments and the integrity of the advice you’ve received. This blog post will guide you through the steps you should take if you find yourself in this situation, ensuring you are well-informed and prepared to protect your financial interests.

Understanding the Investigation

First, it’s crucial to understand what it means when a stockbroker is investigated by entities like the SEC or FINRA. These investigations typically focus on allegations of securities fraud, unethical behavior, or other violations of regulatory standards. Common issues include misrepresentation, unauthorized trading, or misappropriation of funds. As an investor, you should receive notification if your broker is directly implicated in a case that affects your investments. Stay informed by reading any correspondence from regulatory bodies or your brokerage firm, and don’t hesitate to ask for detailed explanations about the investigation’s scope and nature.

Assessing Your Financial Position

Once you are aware of the investigation, assess your current financial position and review your investment portfolio. Check for any unauthorized transactions or inconsistencies in your account statements. If you notice anything suspicious, document it meticulously as it could be crucial for any claims you might need to file later. This is also a good time to consider if diversifying your investments or changing financial advisors might better align with your financial goals and risk tolerance, especially in light of the investigation.

Seeking Professional Advice

Dealing with a situation where your financial advisor is under investigation can be complex and stressful. It is wise to seek independent legal and financial advice. A financial advisor can help review your investment strategy and ensure it still meets your objectives, while a legal professional specializing in securities law can provide guidance on your rights and potential actions if your investments have been adversely affected. They can also assist in filing claims for compensation through FINRA’s arbitration process, if necessary.

Protecting Your Investments

As the investigation unfolds, it’s essential to stay proactive in protecting your investments. This might involve setting up alerts on your accounts, increasing the frequency of reviews with your financial advisor, or even temporarily halting any further investments until the investigation is resolved. Additionally, keep all records of communications and transactions related to your investments, as these documents can be vital in case of disputes or claims for compensation.


An investigation into your stockbroker by the SEC or FINRA doesn’t automatically mean your investments are at risk, but it does necessitate a heightened level of vigilance and proactive management. By understanding the nature of the investigation, assessing your financial situation, consulting with professionals, and actively managing your investment portfolio, you can effectively navigate through this challenging time. Always remember that regulatory bodies like SEC and FINRA are there to protect investors and maintain the integrity of the financial markets.