Our clients often ask us to perform due diligence before they commit to multi-million dollar investments. Many of the tools needed to perform such complicated financial investigations aren’t accessible to most of the public. Still, a wide array of resources are readily available to help just about everyone reduce risk in the important decisions they make. (The New York Times recently noted as much in a blog post about the arbitration award former “Dallas” star Larry Hagman won from Citigroup).
Due diligence is especially useful when making an important decision regarding hiring or working with someone who is in a regulated industry – think financial services, lawyers, doctors, real estate professionals, or anyone in a licensed profession. Here are some helpful hints if you’re interested in being your own investigator (note that these apply to the U.S. only):
- In the financial services world you should always look not only at the SEC investment adviser check and FINRA’s broker dealer check as the Times post suggests, but each state has a securities regulator that is worth checking in with for complaints or disciplinary actions. The North American Securities Administrators Association is a good source of state regulatory information.
- Lawyers are licensed in the states in which they are admitted to practice, so if someone says that they are admitted to practice in multiple states, remember to check with each one. Generally you’ll find either a state regulatory body or local bar association (or both) that provides this information. In addition to registration information, look for records on complaints and disciplinary histories. This may require a phone call in addition to a web site check, so make sure you read the fine print.
- Similarly, information on medical doctors is kept by the state boards of medicine in whatever state the individuals practice; see the American Medical Association Web site for a listing of state boards. Again, look not only for registration information but for disciplinary histories and complaints as well.
- There are dozens of other regulated professions that vary from state-to-state: certain professions may be regulated (and require a license) in one state, but not another. The single best resource for doing your own public records search of licensed professions is the BRB Publications’ Web site, a public records portal with links to hundreds of occupational licensing sites in every state.
BRB will also link you to thousands of free criminal and civil records, property ownership information, and corporate records — allowing you to extend your investigations far beyond professional license and disciplinary searches. The amount of information available online varies from state-to-state (and even county-to-county within individual states) but it’s always worth checking to see what you can find.
Never be wary of digging into someone’s background before doing business with them or hiring them. It’s a good habit to get into, and you have a right to the information.