How can I verify that a broker I found online is legitimate?
"(I answered a similar question before.) Essentially, you shouldn't trust a site you find on the Internet merely because it looks professional and real.  Before signing up with any new service provider you found online, you should verify the authenticity of both the organization itself and their web site address. Even if the name displayed by a web site represents a legitimate brokerage firm, any site you happen to come across on the Internet could be an elaborate spoof of a real company, intended to capture your personal details (or worse). First, to check if a brokerage firm is in fact registered to trade securities – in the United States – you can consult FINRA's BrokerCheck online service.  This might be the first of many checks you should undertake ... after you convince yourself that FINRA is legitimate.  A meta-problem ;-) Then, if you want to know if the web site address is authentic, one way is to contact that broker offline using the contact information found from a trusted source, such as the FINRA BrokerCheck details.  Unfortunately, those details do not currently appear to contain the broker's web site URL.  (Else, that could be useful.) Another thing to look at is the site's login or sign-up page, for a valid SSL certificate that is both issued to the correct legal name of the brokerage firm as well as has been signed by a well-known certificate authority (e.g. VeriSign). For a financial services firm of any kind, you should look for and expect to see an Extended Validation Certificate.  Any other kind of certificate might only assert that the certificate was issued to the domain-name owner, and not necessarily to an organization with the registered legal name.  (Yes, anybody can register a domain with a similar name and then acquire a basic SSL certificate for that domain.) FWIW, Scottrade and ShareBuilder are both legitimate brokers (I was aware already of each, but I also just checked in the FINRA tool), and the URLs currently linked to by the question are legitimate web site addresses for each.  Also, you can see their EV certificates in action on secured pages here and here. As to whether your investments with those brokers would be ""safe"" in the event of the broker failing (e.g. goes bankrupt), you'll want to know that they are members of the Securities Investor Protection Corporation (Wikipedia).  (Of course, this kind of protection doesn't protect you if your investments simply go down in value.) But do your own due diligence – always." Both Scottrade and ING Direct (CapitalOne) have physical branches. Scottrade are wide-spread, ING/CapitalOne are less common (in California where I live, I have a bunch of Scottrade branches around where I live, but the only ING presence I know of is in LA on Sepulveda at Santa Monica). So one way to verify the company is legit is to go to their physical location and talk to the people there. Similarly, you can find physical locations in major metropolitan areas for many other web-based discount brokers. In my area (SF Bay Area) we have Scottrade, ETrade, Fidelity, TD Ameritrade, and that's just those I've actually seen with my own eyes. You can just walk in and talk to the people there about their options and their web operations. It is hard and unlikely for a sting operation to set up a web of brick-and-mortar offices across the nation. Even Madoff had only one or two offices. Of course I totally agree with Chris's answer, especially with regards to the SSL certificates' verification and spoofing and phishing avoidance. How you check if a broker is legitimate: 1) Are they a registered broker dealer? Broker dealers have to be registered with FINRA and the SEC , which have their own databases for you to look up individuals and companies. here is FINRA's http://www.finra.org/Investors/ToolsCalculators/BrokerCheck/ FINRA is a self-regulatory agency, the SEC is a federal government agency. All things considered, they pretty much have similar legislative authority over the industry. But thats a different story. If the broker isn't able to produce information that would confirm their registration status, or if you can't readily find it in the regulators database, then that is a major red flag. The biggest red flag of them all. 2) If brokers are also acting as a consumer bank, such as how Merrill Lynch is now part of Bank of America and the accounts can be linked pretty easily, then they should will also be regulated by the FDIC. This means that you will be able to find the capital ratio that the company has, letting you know how stable it is as an institution. Physical locations, the name, and duration of existence, or their rating on BBB have nothing to do with it.
Yup, if he/she is talking about a broker/dealer, but if he's talking to an RIA and is trying to find out who the custodian is then he won't have a statement yet. I don't think he has opened the account yet, but I'm not sure and could be totally misunderstanding the question. It depends on the broker. The one I use (Fidelity) will allow me to buy then sell or sell then buy within 3 days even though the cash isn't settled from the first transaction. But they won't let me buy then sell then buy again with unsettled cash. Of course not waiting for cash to settle makes you vulnerable to a good faith violation. "A friend since July online and big business talks and trust/money forwards.  Usually a question ""is this a scam or legitimate?"" is hard to answer since obviously scams are modelled after legitimate stories (or they'd easily fail). If there were bookmakers for ""scam or legitimate"", this one would easily gather odds of 10000:1.  The only plausible reason for this to be legitimate would be to defraud the scam-or-legitimate bookmakers. At any rate, Exxon is a large company and has to obey labor laws.  They cannot set up operations in a manner where their workers may not have access to their salary for prolonged times without easy remedy. Drop communications immediately, don't open them, don't read them.  They hook you with emotional investment.  They will redouble efforts if it appears you are slipping out of their reach.  Explanations will become more plausible, more pressing, more emotionally charged.  You are a big promising fish and they won't let you swim off without a serious struggle to rehook you. Hand your communication so far to law enforcement.  That may help with not having to figure this out on your own." "Yes, there is a lot they are leaving out, and I would be extremely skeptical of them because of the ""reasons"" they give for being able to charge $0 commissions. Their reasons are that they don't have physical locations and high overhead costs, the reality is that they are burning venture capital on exchange fees until they actually start charging everyone they suckered into opening accounts. They also get paid by exchanges when users provide liquidity. These are called trade rebates in the maker-taker model. They will start offering margin accounts and charging interest. They are [likely] selling trade data to high frequency trading firms that then fill your stock trades at worse prices (Robinhood users are notorious for complaining about the fills). They may well be able to keep commissions low, as that has been a race to the bottom for a long time. But if they were doing their users any actual favors, then they would be also paying users the rebates that exchanges pay them for liquidity. Robinhood isn't doing anything unique as all brokers do what I mentioned along with charging commissions, and it is actually amazing their sales pitch ""$0 commissions because we are just a mobile app lol"" was enough for their customers. They are just being disingenuous." I have been careful here to cover both shares in companies and in ETFs (Exchange Traded Funds). Some information such as around corporate actions and AGMs is only applicable for company shares and not ETFs. The shares that you own are registered to you through the broker that you bought them via but are verified by independent fund administrators and brokerage reconciliation processes. This means that there is independent verification that the broker has those shares and that they are ring fenced as being yours. The important point in this is that the broker cannot sell them for their own profit or otherwise use them for their own benefit, such as for collateral against margin etc..  1) Since the broker is keeping the shares for you they are still acting as an intermediary. In order to prove that you own the shares and have the right to sell them you need to transfer the registration to another broker in order to sell them through that broker. This typically, but not always, involves some kind of fee and the broker that you transfer to will need to be able to hold and deal in those shares. Not all brokers have access to all markets. 2) You can sell your shares through a different broker to the one you bought them through but you will need to transfer your ownership to the other broker and that broker will need to have access to that market. 3) You will normally, depending on your broker, get an email or other message on settlement which can be around two days after your purchase. You should also be able to see them in your online account UI before settlement. You usually don't get any messages from the issuing entity for the instrument until AGM time when you may get invited to the AGM if you hold enough stock. All other corporate actions should be handled for you by your broker. It is rare that settlement does not go through on well regulated markets, such as European, Hong Kong, Japanese, and US markets but this is more common on other markets. In particular I have seen quite a lot of trades reversed on the Istanbul market (XIST) recently. That is not to say that XIST is unsafe its just that I happen to have seen a few trades reversed recently. "Generally, yes.  Rather than ask, ""why are these guys so cheap?"", you should be asking why the big names are so expensive. :) Marketing spend plays a big role there. Getting babies to shill for your company during the super bowl requires a heck of a lot of commissions. Due to the difficulties involved in setting up a brokerage, it's unlikely that you'll see a scam. A brokerage might go bankrupt for random reasons, but that's what investor insurance is for. ""Safeness"" is mostly the likelihood that you'll be able to get access to your funds on deposit with the broker. Investment funds are insured by SIPC for up to $500,000, with a lower limit on cash. The specific limits vary by broker, with some offering greater protection paid for on their own dime. Check with the broker -- it's usually on their web pages under ""Security"". Funds in ""cash"" might be swept into an interest-earning investment vehicle for which insurance is different, and that depends on the broker, too. A few Forex brokers went bankrupt last year, although that's a new market with fewer regulatory protections for traders. I heard that one bankruptcy in the space resulted in a 7% loss for traders with accounts there, and that there was a Ponzi-ish scam company as well. Luckily, the more stringent regulation of stock brokerages makes that space much safer for investors. If you want to assess the reliability of an online broker, I suggest the following: It's tempting to look at when the brokerage was founded. Fly-by-night scams, by definition, won't be around very long -- and usually that means under a few months. Any company with a significant online interface will have to have been around long enough to develop that client interface, their backend databases, and the interface with the markets and their clearing house. The two brokerages you mentioned have been around for 7+ years, so that lends strength to the supposition of a strong business model. That said, there could well be a new company that offers services or prices that fit your investment need, and in that case definitely look into their registrations and third-party reviews. Finally, note that the smaller, independent brokerages will probably have stiffer margin rules. If you're playing a complex, novel, and/or high-risk strategy that can't handle the volatility of a market crash, even a short excursion such as the 2010 flash crash, stiff margin rules might have consequences that a novice investor would rather pretend didn't exist." My best answer is to simply fish out that old email account. DumbCoder makes a good point - the company whose shares you own can probably figure out what brokerage firm is holding the shares, but it'd take a lot on their end. Honestly you're better off just hitting up random brokerage firms until you find the right one than going to the company and asking them where your shares are. Good luck. It is a Scam. Don't invest more money here. Their website is the proof. Investments may appreciate or depreciate and you may not receive more   than you initially invested. The Peterson Group offers products that   are traded on margin and entail a degree of risk. You may incur losses   that exceed your initial investment. Please ensure you are aware of   and fully understand the risks involved, and seek independent advice   if necessary. Losses exceeding your initial investments does not sound a good investment even if it is not a scam. Not much contact information. Their contact page has only a form. No email. No phone number. No social media links. I would like to point some information from Dumbcoder's answer, Just browsed their website. Not a single name of anybody involved.   Their application process isn't safe(No https usage while transferring   private information). No names of the person's involved is a thing to notice. All the companies websites name their owner, CEO and the like. How easy is it to take out your money? To they offer any trading? Do you have to put more money up on your own to trade with?  This seems pretty sketchy. I am currently working at a prop trading firm and although some sketchy firms require you to make a deposit, most legit ones do not. Not to mention their commissions are incredibly high (I interviewed at another sketchy firm but only charges a couple cents for commission).   &gt;most of the time you get rebates on them  If it is not explicitly stated in the contract of how they decide your rebates than don't expect much. Most of the trading industry is build around taking advantage of people where people's word soon becomes meaningless unless it is in writing. Here are a couple of articles that can help highlight the differences between a broker and an online investment service, which seems to be part of the question that you're asking. Pay attention to the references at the end of this link. http://finance.zacks.com/online-investing-vs-personal-broker-6720.html Investopedia also highlights some of the costs and benefits of each side, broke and online investment services. http://www.investopedia.com/university/broker/ To directly answer your question, a broker may do anything from using a website to making a phone call to submitting some other form of documentation. It is unlikely that he is talking directly to someone on the trading floor, as the volume traded there is enormous. How do you find an ethical, honest practitioner of any business? One: Make a small transaction with them and see how they treat you. If they cheat you on something small, don't give them a chance with something big. Two: Ask family and friends for recommendations. Three: Get information from public sources, like web sites where people post reviews of businesses, consumer advocacy organizations, groups like the Better Business Bureau, etc. Personally I consider all these of questionable value as you're asking one stranger to advise you on the reliability of another stranger, but better than nothing. "Check the transactions costs, ""Desk fees"" and the whole structure, sit down with them and list everything.  Then make a spreadsheet and calculate all the stuff they hit you with and figure out how good you have to be in trading to make money, (in terms of accuracy and p/l)." Every brokerage is different, on all of their websites they have an actual list of fees. There are tons of different charges you may encounter. The order book looks fine, if it were a liquid market. However, a bid that matches with an ask will always be met on a first come first serve basis. There's no other way to do it.   Most traders don't like doing that because they want to try to get a lower price. HFT don't have to worry about meeting the ask because they're just going to pass that cost on to the guy on the hook.   By the time the HFT makes the buy they already know the guy wants to buy at 70.00  They did not know that at the time they placed the buy order. If the buy order from the HFT hasn't been cancelled it means they already found someone.  How? By testing the market with sell orders at the same time they were sending buy orders.  They keep a little bit of stock in reserve to perform these tests. The only issue I can see is that the stranger is looking to undervalue their purchase to save money on taxes/registration (if applicable in your state). Buying items with cash such as cars, boats, etc in the used market isn't all that uncommon* - I've done it several times (though not at the 10k mark, more along about half of that). As to the counterfeit issue, there are a couple avenues you can pursue to verify the money is real: *it's the preferred means of payment advocated by some prominent personal financial folks, including Dave Ramsey