What to Do If Your Financial Advisor Was Barred or Fired

Finding out your financial advisor was barred by FINRA or fired by the brokerage firm is unsettling, especially if you have lost money. It does not automatically mean your account was mishandled. But it is a reason to look closely at what your advisor recommended and whether you may be able to recover losses through FINRA arbitration.

What It Means When a Financial Advisor Is Barred

A FINRA bar is permanent. A barred advisor can no longer work for any FINRA-registered brokerage firm. FINRA or the SEC usually bars someone after finding serious violations, such as stealing from clients, selling unapproved investments, or lying to regulators.

Many bars also come from an advisor refusing to give FINRA information or testimony under FINRA Rule 8210. That refusal does not prove misconduct. It often means FINRA was investigating something the advisor chose not to answer for.

Barred vs. Suspended

A suspension is temporary. The advisor is out of the industry for a set period, then can return. A bar has no end date. Check your advisor’s FINRA BrokerCheck report to see which one applies and why.

What It Means When a Financial Advisor Is Fired

When a brokerage firm ends an advisor’s registration, it must file a termination notice, called a Form U5, within 30 days. If the advisor was fired or allowed to resign after allegations of misconduct, the firm must report that. Those allegations then show up as a “Termination” disclosure on BrokerCheck.

A firing on its own is not a finding of wrongdoing. Advisors leave firms for many ordinary reasons. The details on the BrokerCheck report tell you whether the firm cited something that may involve your account.

What Happens to Your Account

Your account stays with the brokerage firm, not the advisor. The firm should assign you a new advisor and keep your holdings as they were. If a barred or fired advisor contacts you about moving money or buying something new, be careful. Check whether that person is still registered as an investment adviser on the SEC’s Investment Adviser Public Disclosure site before doing anything.

Steps to Take Now

1. Read the full BrokerCheck report. Look at the bar or termination details, customer complaints, and outside business activities. Our guide to the broker CRD number explains how to find the right record.
2. Gather your records. Pull account statements, trade confirmations, and any emails or notes from your advisor.
3. List every investment your advisor sold you. Pay special attention to anything that does not appear on your brokerage statements. That can be a sign of selling away.
4. Confirm your holdings with the firm. Ask who your new advisor is and request a current statement.
5. Do not sign anything new from the former advisor until you understand what happened.
6. Talk to a securities attorney. Claims have time limits, so it is best to act early.

Can You Recover Your Losses?

You may be able to, even if the advisor is gone. Brokerage firms must supervise their advisors under FINRA Rule 3110. If the firm missed warning signs, it may be liable for your losses. That matters because a barred advisor may not have the money to pay an award, while the firm often does.

Speak With a Securities Attorney

If your financial advisor was barred or fired and you have lost money, The White Law Group may be able to help. We are national securities fraud attorneys with offices in Chicago and Seattle, and we represent investors in FINRA arbitration claims against brokerage firms in all 50 states.

Call us at (888) 637-5510 or contact us online for a free consultation.

Frequently Asked Questions

How do I file a claim to recover money I lost with a barred or fired advisor?

Most investors file a claim through FINRA arbitration. Most brokerage account agreements typically include a pre-dispute arbitration clause, so disputes go to FINRA rather than court, and arbitration can still result in a monetary award. The claim is usually brought against the brokerage firm the advisor worked for when the losses happened.

What is selling away, and why does it come up when advisors are fired?

Selling away is when an advisor sells an investment the brokerage firm did not approve or know about. It is a common reason advisors are fired or barred, and those investments often do not show up on your account statements.

Can the brokerage firm be responsible even though it fired the advisor?

Yes. Firing an advisor does not erase the firm’s duty to have supervised that advisor while they worked there. If the firm should have caught the problem sooner, it may be liable for the losses that happened on its watch.