When searching for a financial advisor, you might see a badge indicating they have "disclosures" on their record. This can seem alarming at first—but not all disclosures are created equal. Understanding what disclosures mean can help you make better decisions.
💡Key insight: Having a disclosure doesn't automatically make an advisor bad. Many successful advisors have minor disclosures that don't reflect on their current practice. What matters is the type, severity, and recency of the disclosure.
See a real example: View Vincent Camarda's 23 disclosures →
Camarda was charged by the SEC for his role in the $500M+ Par Funding Ponzi scheme, permanently barred from CFP status, and suspended indefinitely by FINRA. Arbitration panels have ordered him to pay over $7 million to harmed investors. His disclosures show what serious regulatory action looks like.
What Counts as a Disclosure?
The SEC requires advisors to report a wide range of events on Form ADV. These include:
Customer Disputes
Complaints filed by clients, whether resolved, settled, or dismissed. This includes:
- Arbitration cases (most common in the industry)
- Civil lawsuits related to investment activities
- Written complaints that resulted in compensation over $2,500
Context matters
Many customer disputes are settled by firms as a business decision, even when the advisor did nothing wrong. Settlement is often cheaper than fighting, regardless of merit.
Regulatory Actions
Actions taken by the SEC, FINRA, or state regulators:
- Censures or fines
- Suspensions
- License revocations
- Orders to cease certain activities
Criminal Matters
Felony charges or convictions, and certain misdemeanors related to:
- Investment-related crimes
- Fraud or theft
- Bribery or forgery
Financial Events
Personal or business financial difficulties:
- Bankruptcy filings
- Unpaid judgments or liens
- Bond denials
How to Evaluate Disclosures
When you see a disclosure, ask yourself these questions:
1. What type of disclosure is it?
Disclosure Types by Severity
| Type | Severity | What to Consider |
|---|
| Customer dispute (settled) | Low to Medium | Common in the industry; read the details |
| Customer dispute (denied) | Low | Claim was investigated and rejected |
| Regulatory fine (minor) | Low to Medium | Often procedural violations |
| Regulatory suspension | High | Serious concern; investigate further |
| Criminal conviction | Very High | Major red flag |
| Bankruptcy | Medium | May indicate poor financial judgment |
2. How old is it?
A disclosure from 15 years ago is very different from one from last year. People learn and improve. Look for:
- Patterns of recent disclosures (concerning)
- Single old disclosure with clean recent record (less concerning)
- Multiple disclosures over time (investigate thoroughly)
3. What are the details?
The disclosure record includes specifics. Look for:
- Allegations: What was the advisor accused of?
- Resolution: Was it settled, denied, or proven?
- Amount: How much money was involved?
- Advisor's response: Did they provide context?
4. Is there a pattern?
One complaint in 20 years of practice is different from five complaints in three years. Look at:
- Total number of disclosures vs. years in the industry
- Whether complaints involve similar issues
- Whether the advisor changed firms frequently
Red Flags to Watch For
⚠️Serious concerns: These disclosure types warrant extra caution:
- Criminal convictions (especially fraud-related)
- Regulatory suspensions or bars
- Multiple recent customer complaints with similar allegations
- Unauthorized trading allegations
- Misrepresentation or fraud allegations (even if settled)
- Failure to supervise (for managers)
When Disclosures Aren't Concerning
Some disclosures are relatively common and may not indicate poor practice:
- Settled customer disputes under $25,000: Often resolved as a business decision regardless of merit
- Technical regulatory violations: Late paperwork, minor record-keeping issues
- Denied complaints: Someone filed a complaint, but it was investigated and rejected
- Very old disclosures: Something from 20+ years ago with a clean record since
How to Get More Information
If you want to dig deeper into a disclosure:
- BrokerCheck: FINRA's tool at brokercheck.finra.org provides detailed disclosure information for broker-dealers
- SEC IAPD: The Investment Adviser Public Disclosure database has Form ADV filings
- Ask the advisor: A trustworthy advisor will explain any disclosures openly and completely
Our data comes directly from SEC filings. When you click on an advisor's disclosures on AdvisorDiscover, you're seeing the same information that regulators have access to.
The Bottom Line
Disclosures are part of the industry's transparency system. They exist so you can make informed decisions—not to automatically disqualify advisors. Here's a balanced approach:
- Don't automatically dismiss advisors with disclosures
- Don't ignore disclosures either—read the details
- Look for patterns and recent activity
- Ask advisors to explain their disclosure history
- Trust your judgment after gathering information
A good advisor with one minor disclosure 10 years ago is likely better than an unknown advisor with no track record at all.
Filter by Disclosure History
Remember: Having disclosures doesn't automatically disqualify an advisor. Many successful advisors have minor disclosures—what matters is the type and recency.
