Decoding Your Brokerage Statements and Trade Confirmations

Understanding Brokerage Account Statements and Trade Confirmations

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Brokerage account statements and trade confirmations are more than just records — they are key tools for spotting errors or even potential misconduct by a broker or brokerage firm. Reviewing them carefully can help protect your investments.

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Reviewing Your Statements

• Inspect every detail: Contact your firm immediately about any transaction or entry you don’t recognize or didn’t authorize.

Breaking Down Your Account Statement

• Statement Period or End Date: Confirm that the statement covers a specific period with consistent dates (e.g., January 1 to March 31).

• Account Holder Information: Ensure your name, address, and account number are accurate. Update your firm promptly with any changes, including your email.

• Firm Contact Information: Verify the firm’s name, address, and phone number, as well as clearing firm details, if applicable.

• Account Summary: Check your overall performance and ensure all income is correctly credited. Investigate any unauthorized or unusual activity.

• Fees: Most should be listed on statements or trade confirmations. Follow up on anything unfamiliar or excessive.

• Account Activity: Match all transactions with your trade confirmations.

• Portfolio Details: Confirm that all listed assets belong to you and align with your investment strategy.

• Investment Objectives: Ensure your stated goals (e.g., growth, conservative, speculative) are still accurate and match your activity.

• Disclosures and Definitions: Read the legal and fee-related notes — they can contain critical information.

 

Tip: Brokerage firms generally must send clients quarterly statements and trade confirmations at or before trade settlement. You may receive these from both your brokerage and its clearing firm.

 

Carefully Reviewing Trade Confirmations

• Key Trade Details: Confirm the date, time, price, and share quantity match your records.

• Broker’s Role: See if the broker acted as your agent (buying/selling on your behalf) or as a principal (trading for their own account).

  • Agent: Must disclose commissions on the confirmation.

  • Principal: Must disclose any mark-up, mark-down, or commission-equivalent.

• Bond Transactions: Similar to equities — commissions must be disclosed if acting as an agent. As a principal, prices include mark-ups or mark-downs.

• Mark-Up/Mark-Down Disclosure: For retail municipal, corporate, or agency bond trades, the mark-up or mark-down must be disclosed as both a dollar amount and percentage of market price when the broker acts as principal and trades the same security on the same day.

 

Best Practices to Avoid Problems

• Ask Questions: Don’t hesitate to request explanations about fees, commissions, or trade details.

• Cross-Check: Compare trade confirmations with your statements for the relevant period.

• Flag Unauthorized Trades: Report in writing immediately.

• Categorize Trades: Ensure trades are correctly marked as solicited or unsolicited.

• Scrutinize Fees: Watch for extra charges like handling or mailing, and question anything unexpected.

 

Bottom Line:
Your account statements and trade confirmations are essential tools for monitoring your investments. Reviewing them regularly — and acting quickly if you spot issues — is one of the best ways to safeguard your portfolio.