Every Trade, Every Recommendation, Every Rep — You Supervise It All.
Protecting FINRA-registered securities firms and their principals
A broker-dealer buys and sells securities — for customers, for its own account, or both — and does it under one of the most prescriptive regulatory regimes in business. The defining feature is FINRA membership and the supervisory duty that comes with it: the firm is responsible not only for its own conduct but for supervising every registered representative, and most disputes are resolved not in court but in FINRA arbitration. That combination of securities E&O, a mandatory fidelity bond, supervisory liability, and customer arbitration is what defines the space and separates a broker-dealer from an ordinary financial firm. A broker-dealer needs coverage built around securities professional liability, a FINRA-compliant fidelity bond, and management liability, sized to its business lines and rep count.
Properly structured coverage protects the firm, its principals, its registered representatives, and the customers whose accounts it handles.
The Broker-Dealer's Signature Exposures
The defining exposure is securities professional liability and supervision. Customers bring claims — usually in FINRA arbitration — over suitability, unauthorized trading, misrepresentation, churning, and failure to supervise. The firm's fidelity bond (the SEC/FINRA-required blanket bond) responds to employee dishonesty and theft from customer accounts. Management liability (D&O) responds to claims against the firm and its principals, including regulatory enforcement. Cyber and privacy is a front-line peril given customer financial data and account-takeover fraud. Failure-to-supervise claims — where the firm is liable for a rep's conduct — are the exposure that most defines the business.
Key Risks Broker-Dealers Face
The most consequential risks include:
Customer arbitration over suitability, unauthorized trading, or misrepresentation
Failure-to-supervise claims for a registered representative's conduct
Selling-away and outside-business-activity exposure from reps
FINRA and SEC examination and enforcement
Fidelity/theft loss from customer accounts (bond exposure)
Cyber, account takeover, and breach of customer financial data
Management-liability and regulatory claims against principals
The two that most define the space are customer arbitration and failure-to-supervise liability.
Core Coverages for Broker-Dealers
A properly built broker-dealer program typically includes:
Securities Broker-Dealer Professional Liability (E&O) — Covers suitability, misrepresentation, supervision, and customer-arbitration claims.
Fidelity Bond (SEC/FINRA Blanket Bond) — Covers employee dishonesty and theft — the required broker-dealer bond.
Management Liability / D&O — Covers the firm and its principals, including regulatory enforcement.
Cyber & Privacy Liability — Covers account takeover, breach of customer data, and funds-transfer fraud.
Employment Practices Liability — Covers discrimination, harassment, and wrongful-termination claims.
Commercial GL/BOP & Umbrella — Cover premises and add limits over a large financial-lines claim.
What's Commonly Overlooked
Broker-dealer programs are most often weakened by:
E&O that doesn't match the firm's actual business lines and products
Fidelity bond below the FINRA-required minimum for the firm's size
Failure-to-supervise and selling-away exposure underinsured
Coverage that doesn't extend to all registered representatives
Cyber and account-takeover limits below the customer-account exposure
The gaps that hurt most are underscoped E&O and an insufficient fidelity bond.
Real-World Claim Examples
A customer files a FINRA arbitration over an unsuitable recommendation
A registered rep engages in selling-away or unauthorized trading
A FINRA examination becomes an enforcement action
An employee or intruder diverts funds from customer accounts
An account-takeover or breach exposes customer financial data
Any one of these can be significant, and the customer-arbitration and supervision claims are the most distinctive.
Regulatory & Licensing Context
Broker-dealers register with the SEC and, in nearly all cases, are members of FINRA and covered by SIPC for customer protection. They must maintain a FINRA-compliant fidelity bond sized to the firm, follow the net-capital rule, and operate a written supervisory system with a designated principal. Registered representatives hold Series licenses and are subject to the firm's supervision. Suitability (Reg BI for retail), anti-money-laundering, books-and-records, and cybersecurity rules all bear directly on the E&O, bond, and cyber exposure, and the firm's business lines drive how coverage must be built.
Why Proper Placement Matters
Underwriters weigh the firm's business lines and products, number of registered representatives, retail versus institutional mix, supervisory system, disciplinary and arbitration history, and controls. Because the exposures are specialized and FINRA-driven, broker-dealers are placed through securities and financial-institution markets that write broker-dealer E&O, the fidelity bond, and D&O together and size the bond to FINRA requirements. Matching E&O to the actual business lines, meeting the bond minimum, and covering supervision are the essential steps. This sits within the broader investment company insurance family alongside hedge fund and PE managers and asset and wealth managers.
Our Approach
At Cory Washington & Co., we insure broker-dealers around the supervision and customer-account duties the business runs on — placing securities professional liability, a FINRA-compliant fidelity bond, and management liability sized to your business lines and rep count, with cyber and employment coverage to match. We build the program so it covers your registered representatives and coordinates with your broader investment company coverage.
You supervise every trade, every recommendation, and every rep, which makes a broker-dealer a distinct risk — we build the coverage to match it, securities E&O and the fidelity bond included.
All insurance descriptions on this website are provided by Cory Washington & Co. LLC strictly for general informational purposes. They are not intended to be, and should not be relied upon as, legal, financial, or insurance advice. The information presented is general in nature and does not guarantee the availability, terms, conditions, or scope of any insurance coverage. Actual coverage is determined solely by the specific policy language issued by the insurer and remains subject to underwriting approval. Nothing on this website creates or implies an agent-client relationship, binds coverage, or alters any existing policy. Cory Washington & Co. LLC expressly disclaims any liability for actions taken, or not taken, based on the content provided here. For advice regarding your particular situation, please consult directly with a licensed insurance professional at Cory Washington & Co. LLC or another qualified insurance professional, and always review your policy documents in full.
See the coverages a broker-dealer business may carry — core, prevalent, and situational — plus the gap most often missed, in the Broker-Dealer Coverage Checklist.
Complete the Broker-Dealer Supplemental online in a few guided steps, download the fillable PDF, or browse all applications.
Frequently Asked Questions
How do I get broker-dealer insurance through Cory Washington & Co.?
Request a quote or contact our team. We start with a short conversation about your operations, analyze your exposures, then negotiate broker-dealer insurance across multiple carriers that compete for your account and present options with the trade-offs explained. Cory Washington & Co. LLC is licensed in all 50 states.
What drives the cost of broker-dealer insurance?
It depends on your exposure. Broker-dealer insurance is priced on factors like your industry, size, prior claims, and the limits and deductibles you select — so two businesses rarely pay the same. We shop your account across competing carriers and present the trade-offs in plain English.
Do I need broker-dealer insurance?
Requirements vary. Broker-dealer insurance may be mandated by statute, or required under your contracts, leases, or loan agreements — and in many cases it is simply prudent given the risks involved. We look at your specific obligations and exposures, then recommend the coverage and limits that fit.
What if another agency has already declined or non-renewed my coverage?
Difficult, specialty, and previously-declined placements are a core part of our work. We access excess & surplus (E&S) and specialty markets that many generalist agencies cannot, and we explain the trade-offs clearly so you can decide with confidence.
Available in all 50 states. See how requirements differ in California, Texas, Florida, New York, or choose your state.