NASAA It Pays to Pay Attention to Your Brokerage Account Statements -

This alert is being issued jointly by NASAA, FINRA, and SIPC.

How Often Should You Review Your Brokerage Account Statements for Accuracy?

When was the last time you read your brokerage account statement? For many of us, the answer may be “a while ago” or maybe even “never.”

The best answer is: every month or quarter. Why? Because one of the best ways you can protect your investment portfolio is to monitor your holdings and activity. You should make it a habit to review online or paper account statements and trade confirmations on a regular basis. You should review your statement as soon as you receive it to confirm it correctly reflects your investment decisions and any actions you made or authorized during the time the statement covers. Also, review your complete account statement; don’t just look at the summary page.

What if Something Doesn’t Look Right?

Most investors never experience mistakes or issues with their account statements. However, mistakes can happen; and when they do, it’s important to address them.

Do you see a trade, withdrawal or transfer that you did not discuss or authorize? Perhaps a new fee cropped up? Or maybe the cash balance in your account changed since your previous statement and you don’t know why.

Most of us promptly notify our bank or credit card company if we see a charge or other account activity we don’t recognize or understand on our bank or credit card statements. However, regulators regularly speak with investors who have questions about their account statements or trade confirmations but are reluctant to contact anyone because they “aren’t sure anything is wrong” and “don’t want to get anyone in trouble.”

If you receive an account statement or trade confirmation and say nothing, there may be a presumption by the brokerage firm, a regulator or organization such as SIPC that you authorized the trading or other activity in the account. If you did not authorize the trading or other activity, you should contact your broker immediately to question the inaccuracy or discrepancy. Keep written notes of your conversations, including names of people you spoke to, and matters discussed, as well as the time and date of the conversation.

If you don’t address errors, the broker-dealer, registered investment adviser firm, a regulator or organization such as SIPC may presume that you authorized the trading or other activity in the account.

When Should You Consider Sending Written Communication to the Firm?

In addition to contacting your broker, there are some cases, like those outlined below, where it is also appropriate to send a written communication—via email or letter—to the brokerage firm’s branch manager or other representative at the brokerage firm. Your brokerage firm’s contact information should be available on your account statement as well as on the firm’s website. Remember to keep a copy of all written communications.

As noted on the SIPC website, “If you ever discover an error in a trade confirmation or brokerage statement, you should immediately bring the error to the attention of the brokerage firm in writing. Unless you complain in writing, your eligibility for SIPC protection may be compromised.”

In particular, you should put your concerns in writing in the following situations:

1. Problems with Your Account Statement: You see something in your account statement that you did not authorize or concerns you. Some examples include:

Cash balances unexpectedly change in your account such as:
- An unforeseen increase in the amount of cash in your account, which might have resulted from a data entry error by the brokerage firm, but could also indicate that someone sold securities without your consent; or
- An unexpected decrease in the amount of cash in your account, which could indicate an unauthorized purchase, transfer or withdrawal.
Securities missing from your account or otherwise unaccounted for.
Trades you did not authorize or that look unfamiliar.
Fees charged to your account that you do not understand.

2. Errors on Your Trade Confirmation. For example, errors in the number of shares purchased, or sold or the price at which the trade occurred.

3. Troubling Responses from Your Broker: While most investment professionals will work hard to address your concerns and clear up any errors, you might find that a broker’s response raises potential red flags, such as:

Unresponsiveness—Unreturned phone calls and no, or limited, response to emails or other written communications.
Disengagement—Statements to the effect of “everything’s fine” or “there’s nothing to worry about” even though the issue hasn’t been resolved.
Unreliability—No follow through after promises that a situation is “being taken care of,” such as:
- Telling you that the problem has been resolved but you have not received a written verification or account statement reflecting the correction, or you are promised you will be provided the amended statement “at a later date”; or
- Stating that an unauthorized trade or withdrawal of funds will be addressed (by reversing the trade or re-depositing the funds, for example), which does not happen.
Inconsistency—Different answers about the resolution to the issue from your broker or different individuals at the firm.
“Private” Communications or Settlement Offers—Communication using the broker’s personal email; or attempts to settle with you directly or “off the books” without involving the branch manager or the brokerage firm—by writing you a check, depositing money or securities into your account or providing other compensation.

Sending written communication to the branch manager or the brokerage firm in each of these situations is important because it helps:

You: If the firm does not address the matter and it goes to arbitration or mediation, your written documentation can help support your claims and preserve your eligibility for SIPC protection.
Other Investors: Your written communication alerts the firm about potentially questionable activity that they can investigate further, and possibly identify and remediate similar or related harm to other investors.
The Brokerage Firm: Your written communication gives the firm an opportunity to educate brokers on procedures to prevent future errors or, if necessary, to discipline employees, especially if there is evidence of prohibited activity. Additionally, firms have a regulatory obligation to report certain types of incidents to regulators. This information may then become available to the investing public so investors can make an informed decision when choosing a broker or brokerage firm.

When Should I Contact a Regulator?

If you have contacted your broker, branch manager or firm and they have not resolved the issue or if you have additional concerns, contact FINRA online or by phone at (301) 590-6500. You may also file a complaint using FINRA’s online Complaint Center or contact your State Securities Regulator.