Fidelity Investments: Finra Membership And Its Benefits

Fidelity Investments is a company that offers a range of financial services, including retirement plans, investing, brokerage, and wealth management advice. They provide resources and tools to help individuals manage their finances, plan for the future, and make investments. With a focus on putting their customers first, Fidelity offers no-fee or minimum retail brokerage accounts. As a member of FINRA (Financial Industry Regulatory Authority), Fidelity is subject to regulatory oversight and has been sanctioned in the past for supervisory failures. FINRA's role is to protect investors and ensure market integrity, and they provide a dispute resolution service for investors and firms.

FINRA's BrokerCheck

BrokerCheck pulls information from the Central Registration Depository (CRD), which is the securities industry's online registration and licensing database. This database includes information on individuals and firms registered with FINRA, as well as their registration history, employment history, qualifications, and any relevant disclosures.

For individuals registered with FINRA or a national securities exchange within the last 10 years, BrokerCheck provides a comprehensive report. This report includes a summary of the individual's credentials, a list of their registered securities firms, their employment history, their current registrations or licenses, and a disclosure section detailing any customer disputes, disciplinary events, or criminal and financial matters on their record. Even after an individual's registration has ended for more than 10 years, BrokerCheck will continue to include information if certain criteria are met, such as final regulatory action, certain convictions, or involvement in investment-related civil court cases.

Similarly, BrokerCheck provides detailed reports on brokerage firms, including a summary of the firm, its profile and history, operations, and disclosures. The firm profile describes the firm's establishment, ownership, and daily operations, while the firm history outlines any mergers, acquisitions, or name changes. The operations section details the firm's licenses, registrations, and business activities. The disclosures section provides information on arbitration awards, disciplinary events, and financial matters, offering transparency into any pending actions or allegations.

To facilitate easy access to this information, BrokerCheck allows users to search for individuals or firms by name, CRD/SEC number, employing firm, or zip code. This empowers investors to make informed decisions by thoroughly researching and evaluating investment professionals and firms before engaging with them.

Fidelity Investments' services

Fidelity Investments, formerly known as Fidelity Management & Research (FMR), is an American multinational financial services corporation based in Boston, Massachusetts. Established in 1946, the company is one of the largest asset managers in the world, with trillions of dollars in assets under management and administration.

Fidelity offers a wide range of services to its customers, including:

Retirement Services

Fidelity can help individuals plan for retirement, whether they want to manage their retirement planning independently or with the guidance of a dedicated advisor. The company offers a range of retirement accounts, including the Fidelity Roth IRA, which provides flexibility in saving for retirement while balancing long-term and short-term financial goals. They also assist in consolidating former 401(k) and workplace retirement accounts into a single account without taxes or penalties.

Investment Services

The company caters to both active traders and those investing for the future. Fidelity provides investment advice and offers a variety of investment options, such as stocks, ETFs, mutual funds, CDs, and more. They also provide free resources to support individuals in managing their own investments. Additionally, Fidelity introduced a program called "Stocks By The Slice," which is designed for investors interested in fractional-share ownership and micro-investing, making investing more accessible and affordable.

Wealth Management

Fidelity offers wealth management services, partnering with clients to create customized plans to help grow and protect their wealth. They also provide asset custody services, ensuring the safekeeping and management of clients' assets.

Brokerage Services

As a major brokerage firm, Fidelity offers brokerage accounts with no fees or minimums to open, making investing more accessible. The company provides resources and tools to support individuals in managing their investments.

Online Trading

Fidelity enables individuals to engage in online trading across various asset classes, including stocks, ETFs, bonds, and more.

Financial Planning and Advice

The company provides financial planning and advice to help individuals manage their finances, save for specific goals, and make informed investment decisions. This includes support for everyday finances, college savings plans, and retirement planning.

Cash Management

Fidelity offers cash management products to help individuals spend and save smarter, enabling them to make the most of their money and reach their financial goals.

Life Insurance

Fidelity provides life insurance products to protect individuals' families and loved ones financially.

Fidelity Investments is committed to strengthening the financial well-being of its customers and delivering better outcomes. With a global presence spanning nine countries, they serve a diverse range of clients, including individuals, families, employers, wealth management firms, and institutions.

FINRA's sanctions on Fidelity

Fidelity Investments is a member of FINRA (Financial Industry Regulatory Authority). FINRA is the largest independent regulator for all securities firms doing business in the United States.

In 2015, FINRA sanctioned Fidelity Brokerage Services LLC $1 million for supervisory failures. Fidelity was fined $500,000 and ordered to pay nearly $530,000 in restitution for failing to detect or prevent the theft of more than $1 million from nine of its customers, eight of whom were senior citizens.

Lisa Lewis posed as a Fidelity broker and urged victims to establish joint accounts with her, in which she was listed as an owner. She systematically stole customer assets through numerous transfers and debit-card transactions. Lewis was able to establish more than 50 accounts and convert assets from a number of these accounts for her personal benefit.

FINRA found that Fidelity failed to detect or adequately follow up on multiple "red flags" related to Lewis's scheme. For example, the various accounts shared a number of common identifiers tying them to Lewis, such as a common email address, physical address, or phone number. Fidelity also failed to detect Lewis's consistent pattern of money movements and overlooked red flags in telephone calls handled by its customer service call center, where there were indications that Lewis was impersonating or taking advantage of her senior investor victims.

In addition, FINRA found that Fidelity's inadequate supervisory systems and procedures contributed to the failure to detect and prevent Lewis's fraudulent activities. Fidelity maintained a report designed to identify common email addresses shared across multiple accounts but failed to implement procedures regarding the report's use. As a result, there was a backlog in reviewing thousands of reports, and Lewis's fraudulent activity went undetected for years.

In settling this matter, Fidelity neither admitted nor denied the charges but consented to the entry of FINRA's findings.

FINRA's role

The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organisation (SRO) that acts as an independent regulator for securities firms operating in the United States. FINRA's role is to protect investors and safeguard the integrity of the US capital markets, ensuring that everyone can invest with confidence.

FINRA was formed in 2007 through the consolidation of the National Association of Securities Dealers (NASD) and the member regulation, enforcement, and arbitration operations of the New York Stock Exchange (NYSE). This consolidation aimed to eliminate redundant regulation and reduce the complexity and cost of compliance.

FINRA has several key roles and responsibilities, including:

• Writing and enforcing rules for its member firms, which include more than 3,250 brokerage firms and over 600,000 registered securities representatives.
• Conducting examinations and monitoring the markets to ensure compliance with its rules and federal securities laws.
• Taking disciplinary action against individuals or firms that violate its rules, including fines, restitution orders, suspensions, and expulsions.
• Providing investor education and resources, such as BrokerCheck, to help investors make informed decisions and protect themselves from potential abuses and unethical conduct.
• Offering conferences, meetings, and educational resources to address compliance challenges and questions identified by member firms.
• Operating services like BrokerCheck and the Central Registration Depository (CRD), a central licensing and registration system for the US securities industry.
• Administering qualifying exams for securities professionals, such as the Series 7 and Series 3 examinations.
• Regulating the trading of equities, corporate bonds, securities futures, and options.
• Providing a dispute resolution forum for securities-related arbitrations and mediations between member firms and their customers.

FINRA is funded by member firms and other sources, operating as a not-for-profit organisation. It is overseen by a Board of Governors, with a majority of public governors and other seats held by industry governors and FINRA's CEO. The organisation is subject to oversight by the Securities and Exchange Commission (SEC), which regularly examines and approves FINRA's rules.

Opening a Fidelity brokerage account

Fidelity Investments is a member of the Financial Industry Regulatory Authority (FINRA). Opening a Fidelity brokerage account involves several steps, and the specific process may vary depending on individual circumstances. Here is a step-by-step guide to opening a Fidelity brokerage account:

Step 1: Determine Your Investment Goals and Account Type

Before opening a brokerage account with Fidelity, it's important to define your investment goals. Are you saving for retirement, education, or other financial goals? This will help you choose the right type of account. Fidelity offers various accounts, including:

• Brokerage Accounts: These are versatile trading and investing accounts that offer a wide range of investment choices, such as stocks, bonds, ETFs, options, and mutual funds.
• Retirement Accounts: Fidelity offers different types of retirement accounts, such as Traditional IRA, Roth IRA, Rollover IRA, and Inherited IRA, each with its own tax advantages and features.
• Health Savings Accounts (HSAs): These accounts allow you to invest your health savings and potentially grow them tax-free to cover qualified medical expenses.
• Education Savings Accounts: Fidelity's 529 College Savings Plans and Custodial Accounts enable you to save and invest for a child's future education expenses.
• Cash Management Accounts: These accounts offer features similar to traditional checking accounts but with more competitive rates and additional benefits, such as global ATM reimbursement.

Step 2: Gather the Required Information and Documents

To open a Fidelity brokerage account, you will need to provide personal information and documents. This typically includes:

• Personal Information: Name, date of birth, residential address, Social Security number or Tax Identification number, and contact information.
• Employment Information: Information about your current employment status and income may be required.
• Financial Information: You may need to provide details about your annual income, net worth, investment experience, and financial goals.
• Identification Documents: A government-issued ID, such as a driver's license or passport, is usually required to verify your identity.

Step 3: Complete the Account Application

You can open a Fidelity brokerage account online by visiting the Fidelity website. Follow these steps:

• Navigate to the "Open an Account" section on the Fidelity website.
• Select the type of account you want to open from the available options.
• Provide the required personal, employment, and financial information.
• Review and agree to the terms and conditions of the account.
• Submit the account application for processing.

Step 4: Fund Your Account

Once your account is approved and set up, you will need to fund it to start investing. You can typically fund your Fidelity brokerage account through:

• Electronic transfer from a linked bank account.
• Transfer of assets from another brokerage firm or financial institution.
• Check or wire transfer.

Step 5: Start Investing

After your account is funded, you can begin investing with Fidelity. Take some time to explore the platform, research investment options, and develop a strategy that aligns with your financial goals. Fidelity offers a range of investment choices, including stocks, bonds, ETFs, mutual funds, and more. You can also take advantage of their research tools, educational resources, and mobile trading applications to make informed investment decisions.

It is important to remember that investing involves risk, and the value of your investments may fluctuate. Be sure to carefully consider your investment objectives, conduct thorough research, and, if needed, seek advice from a financial advisor before investing.

Frequently asked questions