Financial Industry Regulatory Authority (FINRA)
FINRA regulates U.S. broker-dealers to protect investors and ensure market integrity.
Tags:Forex RegulationBasic Information
The Financial Industry Regulatory Authority (FINRA) is a U.S.-based self-regulatory organization (SRO) overseeing brokerage firms and securities professionals. Established in 2007 through the consolidation of the National Association of Securities Dealers (NASD) and the regulatory divisions of the New York Stock Exchange (NYSE), FINRA operates under SEC oversight to enforce fair market practices and protect investors. It supervises over 3,394 brokerage firms, 149,887 branch offices, and 612,457 registered representatives as of 2023, funded by member fees rather than taxpayer dollars.
Historical Background
FINRA’s roots trace back to the NASD, founded in 1939 under the Maloney Act amendments to the Securities Exchange Act of 1934. The NASD launched NASDAQ in 1971, which later became independent in 2006. In 2007, NASD merged with NYSE’s regulatory functions to form FINRA, streamlining oversight and reducing regulatory redundancy. This consolidation aimed to enhance market integrity through unified rulemaking and enforcement.
Legal Authority and Regulatory Framework
As an SRO, FINRA derives its authority from the SEC under the Securities Exchange Act of 1934. It enforces federal securities laws, FINRA rules, and Municipal Securities Rulemaking Board (MSRB) standards. Key mandates include rulemaking, member examinations, market surveillance, disciplinary actions, and investor restitution. FINRA’s rules require SEC approval after public comment periods, ensuring transparency and accountability.
Core Responsibilities and Scope
FINRA’s regulatory scope encompasses equities, corporate bonds, securities futures, and options. Key functions include:
1. Rule Enforcement: Investigating misconduct, levying fines (e.g., $48.1 million in 2022), and expelling non-compliant firms or individuals.
2. Market Surveillance: Monitoring billions of daily trades for manipulation using advanced analytics.
3. Licensing and Education: Administering qualification exams (e.g., Series 7) and maintaining the Central Registration Depository (CRD).
4. Investor Protection: Operating BrokerCheck for background checks and the Securities Helpline for Seniors® (844-574-3577).
5. Dispute Resolution: Managing the largest U.S. arbitration forum for securities-related disputes.
Contact Information
Headquarters:
FINRA Support Center
1700 K Street, NW
Washington, DC 20006
Phone: 301-590-6500
Email: via online form at finra.org/contact-finra
Key Divisions:
– Investor Complaint Center: Submit complaints online or by mail.
– Regulatory Tips: Report misconduct via finra.org/contact-finra.
– Small Firm Helpline: Compliance assistance for smaller broker-dealers.
Verifying Regulatory Status
To confirm if a firm or representative is FINRA-regulated:
1. Use BrokerCheck (finra.org/brokercheck) to search by name or CRD number.
2. Check the CRD Database, which catalogs all U.S. securities registrations.
3. Contact FINRA’s BrokerCheck Hotline at 800-289-9999 for assistance.
