What Is Investment Due Diligence?

Basics of Preforming Due Diligence Prior to Making an Investment 

Due diligence should always be performed on the individuals and companies before you invest.

FINRA's BrokerCheck

Run a search for financial professionals on https://brokercheck.finra.org/

Do a Basic Google Search

Run a basic Google search for the financial advisor, stock broker, and company. Employ multiple search engines, including Bing or Yahoo. The last thing you want is to make a large investment to a group posing as a business only to have your money stolen. If you’re not confident, back out of the deal immediately.

Check for Patent or Trademark Filings

Run the names of the company and business owners through U.S. Patent and Trademark Office’s website to find out if they’re associated with any new or past filings. 

Consumer Complaint Websites

The Internet is a feeding ground for businesses and consumers alike who have complaints about their business. Search the Better Business Bureau and Yelp for honest reviews of business performance as well as a history of formal complaints made against them. A company with a long list of angry customers can be a red flag. Keep in mind that any business can pay for a BBB A+ rating, so a squeaky clean record doesn’t necessarily mean the company you’re dealing with has never underperformed for a client.

Criminal and Civil Record Searches

A search of country or state databases can reveal a host of information. The presence of a criminal record or lawsuits, particularly fraud or embezzlement related is a red flag. You don’t want to get money stolen or end up in a situation where you’re testifying about someone’s alleged illegal activity. 

When in doubt, contact a qualified attorney to conduct further due diligence.