May 2012 Archives

May 8, 2012

Are Stockbrokers Required to Tape Record Customer Conversations?

As a general rule, most brokerage firms don't bother to tape record conversations with their customers. Many brokers do, however, maintain a log of any customer contact. Under the little known "Taping Rule," securities brokerage firms that have employed a large number of brokers who came from firms with a history of regulatory violations must tape record all conversations between the broker and customers for a period of two years. The purpose of the rule is to prevent the reoccurrence of sales and telemarking abuses.

If a brokerage firm is subject to the "Taping Rule," this should raise a giant red flag for investors. Below is the current list of firms subject to the "Taping Rule." The Rule must be having a positive affect, because none of the firms listed below are still in business.

  • AIS Financial, Inc.
  • APS Financial Corporation
  • Aura Financial Services, Inc.
  • Brewer Financial Services, LLC
  • Cambridge Legacy Securities, LLC
  • Dolphin & Bradbury Incorporated
  • Genesis Securities
  • iTRADEdirect.com Corp.
  • Maxxtrade, Inc.
  • Meeting Street Brokerage, LLC
  • Melhado, Flynn & Associates, Inc.
  • MICG Investment Management LLC
  • Mission Securities Corp
  • MMR, Inc.
  • Mortgages LTD Securities, LLC
  • Pinnacle Partners Financial Corporation
  • Prestige Financial Center, Inc.
  • Provident Asset Management, LLC

One of the best precautions against becoming a victim of securities fraud is to conduct a background check of your your investment advisor or stock broker using BokerCheck.