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Mailbag: Is my brokerage firm obligated to disclose its financial health?


Here’s another question I received from a reader:

Is there any obligation for brokerage houses to disclose to clients the financial situation of the firm? Is there any agency that helps protect client’s interests? Thanks, Leslie

Brokerage firms perform weekly calculations to demonstrate to the Financial Industry Regulatory Authority and the Securities & Exchange Commission that the firm has adequate capital and has properly segregated customer securities. “So while there is no direct obligation to reveal the firm’s financial conditions to customers, there is a direct obligation to reveal the financial condition to the regulators,” explains Stephen Harbeck, president of the Securities Investor Protection Corp., or SIPC.


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