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NASAA - North American Securities Administrators Association provides information and resources on how to check out your broker or investment adviser.
CFTC Smart Check - United States Commodities and Futures Trading Commission allows you to search licenses for both investment advisers and broker dealers.
SEC Investment Adviser Search - United States Securities and Exchange Commission allows you to search licensed investment advisers and investment adviser representatives.
FINRA Broker Check - Financial Industries Regulatory Authority allows you to search licensed broker dealers and sales representatives.
What is a security?
A security is an investment, generally of an intangible nature, which has certain characteristics. Legislatures and courts have generally identified what will be called a security through the concept of an “investment contract.” The four requirements for an investment contract are that it:
Commonly known securities are stocks, bonds, promissory notes, debentures, and interests in gas, oil, mineral rights, but there are many other types as well.
Why are securities regulated?
Since securities are intangibles that have no intrinsic value aside from the value of the business or assets in which they represent an interest, a security cannot be examined physically as can many goods purchased by consumers. An intelligent judgment of the value of a security requires information about the issuer. The fundamental premise of both federal and state regulation of securities is that investors need protection in the purchase of such unique goods.
State securities laws grew out of the many instances in the early 20th century where unsophisticated, “retail” investors were swindled out of their savings by sellers of worthless or fraudulent securities. Due to their nature, securities laws now require that investors be made aware of any facts of material importance surrounding the security in question. An easy way to think of what these facts may be, is to imagine what might be important to you in deciding whether or not to buy a security. For example, does the issuer actually exist and do they hold a license? Who are the officers or managers of the securities or firm? Are they experienced and of good reputation? Has the issuer ever had any past disciplinary problems? What are the terms of the securities being offered? Securities laws require that answers to these and other concerns be available to potential investors. Think of it as a “seller beware” mentality instead of the reverse.
You can read the Colorado Securities Act and learn about our rules by viewing Securities Laws and Rules.
What is regulated?
Securities laws generally regulate all aspects of the securities business. All securities laws regulate both the investment that is being sold and the person doing the selling or advising. Certain securities and transactions are exempt from some aspects of this regulation based on assumptions that the nature of such securities and transactions does not warrant full regulation.
You can learn more about who and what we regulate under Licensing for Firms and Individuals and Securities Registrations.
How is this regulation enforced?
Sometimes, either regulators will find suspicious activity among a licensee, or complaints from investors or fellow industry members may be reported. In that case, the state will initiate an investigation. If the result of the investigation merits an enforcement action, the state can carry out or initiate one. The tools of the state’s enforcement arsenal include administrative or civil actions and, in some cases, criminal actions. These actions may be taken against a licensee, an issuer, or anyone that has violated, or is believed to be about to violate, the securities laws. You can search and view the Colorado Division of Securities' enforcement activity under Enforcement Actions.
Every year, scammers defraud over 40 million Americans of billions of their hard earned dollars through investment fraud.
Through a study conducted by AAPR and FINRA, the top 5 persuasion tactics used to perpetrate fraud were identified:
In order to prevent becoming a victim yourself, watch out for the following “red flags” in any investment proposal:
How can you protect yourself?