Home Investors NFA Investor Advisory—Conducting Due Diligence

NFA Investor Advisory—Conducting Due Diligence

October 9, 2025

Performing due diligence is the process of investigating and verifying information about an investment opportunity, professional or firm. Conducting research and identifying potential risks and red flags before making investment decisions—especially those involving new financial technologies, tools or products—can prevent exposure to potential frauds and scams.

Due diligence also empowers investors to take an active role in protecting themselves and their finances. By carefully evaluating opportunities in advance, investors are better equipped to avoid emotional or rushed decisions and recognize when an offer is too good to be true.

How to Conduct Due Diligence

  • Verify the investment is offered by a registered entity. It's important to work with regulated entities, such as those registered with NFA, rather than unregistered entities. Registered firms and individuals are subject to the rules, oversight and enforcement actions of their respective regulator(s). Researching the background of the individuals and firms offering you investments—including their registration, license status and disciplinary history—is easy and free. Verify the status of investment firms and professionals using these resources:
    • BASIC: NFA's BASIC system is a free online search tool containing registration and disciplinary history, membership details and contact information for derivatives industry firms and individuals.
    • BrokerCheck: BrokerCheck is FINRA's free tool for researching the background and experience of financial advisers and firms. BrokerCheck tells investors instantly whether a person or firm is licensed, as required by law, to sell securities, offer investment advice or both.
  • Understand the product or investment. Before investing or sharing sensitive information, be sure to educate yourself on the risks, mechanics and fees associated with different investment products so you can recognize the red flags that could indicate potential fraud. You can learn more about various investment products by referencing resources like Futures Fundamentals, which is a one-stop resource designed to simplify and explain complex derivatives topics.
  • Ask questions. Reputable entities with transparent practices will answer your questions and give you time to consider any investment decisions. If a firm or individual avoids answering your questions, pressures you to act quickly or fails to give you satisfactory explanations, reconsider working with that entity.
To report a complaint involving a pending, current or former NFA Member, file a complaint with NFA. If you have questions, contact NFA's Information Center at information@nfa.futures.org, 312-781-1410 or 800-621-0330.