How to Check a DST Broker on FINRA BrokerCheck Before You Wire

Step one: get the CRD numbers from Form CRS and search the person and the firm separately

Every broker-dealer and investment adviser serving retail investors must deliver a Form CRS relationship summary before or at the time of a recommendation: two pages, or four for a firm registered in both capacities, with a required section headed disciplinary history. It identifies the firm, and the representative's CRD number is usually in an email signature.

FINRA's BrokerCheck draws on the Central Registration Depository, the securities industry's online registration and licensing database, and returns a report for each individual and each firm. Run both; an individual who is clean at a firm with a long disclosure record, or the reverse, is information you want before the subscription agreement is signed. If the person acts as an adviser rather than a broker, the SEC's adviser database is the companion search, and the capacity for this recommendation must be disclosed under Regulation Best Interest.

Step two: read the registrations and the exams, because a DST is a security and only a registered person may be paid to sell it

FINRA Rule 1210 requires each person engaged in the securities business of a member to be registered in the category that fits the role, and a representative's registration cannot take effect until the person passes the Securities Industry Essentials exam and an appropriate representative exam. BrokerCheck lists the exams passed and the states of registration.

For a DST, which is a security sold by private placement, the representative exam is either the Series 7, which FINRA describes as qualifying a candidate for the solicitation, purchase and sale of all securities products, or the narrower Series 22, the direct participation programs representative exam. Either must be paired with the SIE. A state law exam sits alongside: the Series 63 is a NASAA exam administered by FINRA for broker-dealer agents, and the Series 66 qualifies a person in two capacities, as a representative of both a broker-dealer and an investment adviser.

Then check the state. A representative must be registered where you are solicited, and the report shows each state registration. FINRA Rule 2040 bars a member from paying compensation to any person who would have to register as a broker-dealer because of those payments and has not, so an unregistered introducer cannot lawfully be paid by the firm for placing you; if one is in the chain, ask who is paying them.

Step three: the employment history tells you how many firms the person has been through, and the firm report tells you who owns it

The individual report shows a registration history covering employment for the last ten years, inside and outside the securities industry, taken from the person's most recent Form U4. Several firms in a few years is not necessarily a problem, but the reasons belong in your first question to them.

The firm report covers where and when the firm was established, its owners and controlling persons, its mergers and name changes, its licenses and lines of business, and a disclosure section covering arbitration awards, disciplinary events and financial matters. If a DST sponsor controls the broker-dealer selling its own trusts, that affiliation is a conflict Regulation Best Interest requires the firm to disclose, and it should also appear in the sponsor's Form D, as described on where to see a DST sponsor's track record.

Information stays on BrokerCheck for ten years after a person's registration ends, and longer where there was a final regulatory action, certain criminal convictions, a civil injunction tied to investment activity, or a sales-practice award or judgment. A person absent from the database has either never been registered or left more than a decade ago.

Step four: read a disclosure entry for what it is, because a filed claim and a finding against the broker are different records

The disclosure section covers customer disputes, disciplinary events and certain criminal and financial matters, and FINRA's own description warns that some items may involve pending actions or allegations that have not been resolved or proven. A customer dispute entry means a customer filed a written complaint or an arbitration claim; it records the allegation, the product, the amount claimed and the status.

Status is the word to read. A pending arbitration is an open claim; a settled matter was resolved without a decision and may carry the representative's statement that settlement was not an admission; a denied complaint was rejected by the firm itself. An award is the only entry in which a panel found for the customer, and under FINRA Rule 12904 awards are in writing and publicly available, so the award itself can be read.

For a DST representative, look at what the disputes concern. Several claims on illiquid private placements, or a pattern of claims that the recommendation ignored the customer's liquidity needs, bears on the care obligation the firm owed you; one decade-old claim on an unrelated product is a different signal. What a claim, an award and the six-year window mean in practice is on how FINRA arbitration works.

Step five: match the names on the subscription package to the report, then verify the wire instructions by a route you already trusted

The firm shown as the representative's employer on BrokerCheck must be the firm named on the subscription agreement, the Form CRS and the selling-group list in the memorandum; a mismatch means a different firm is selling, or none is. Exchange funds move from your qualified intermediary to the sponsor's escrow, as described on the DST closing process, never through the representative.

Confirm the escrow bank and account by telephone to a number you obtained from the memorandum or an earlier document, not from the email carrying the instructions; the one failure BrokerCheck cannot prevent is a wire sent to an impostor.

Hypothetically: a representative with a clean report, a Series 7, a Series 66 and twelve years at one employer still recommends a trust whose leverage is wrong for a retiree who needs the money back in three years. BrokerCheck answers who may sell, not whether this trust fits you; for that, use the DST offering due diligence checklist and have your CPA read the memorandum's loan terms before the identification deadline.