An Overview of FINRA

Simms Law, P.C.                  June 14, 2022

The Financial Industry Regulatory Authority (FINRA) is a U.S. corporation and self-regulatory organization. FINRA is a consolidation of the enforcement, member regulation, and arbitration operations of NASD, the New York Stock Exchange, and NYSE Regulation, Inc. FINRA is a non-governmental organization that is the largest independent regulator for all U.S. securities firms and exchange markets. FINRA’s main goal is the protection of investors, and it attempts to do so by ensuring honesty and fairness in the U.S. securities industry. If you are an investor who has lost money due to the actions of a financial advisor or other financial professional, you may be able to seek compensation in arbitration before FINRA. Below is an overview of FINRA.

FINRA Regulation

FINRA is responsible for regulating:

• Securities firms that conduct business with the public;
• Securities firms that offer professional training, licensing, and testing of registered persons;
• Securities firms that offer mediation and arbitration;
• Securities firms that offer contractual regulation of the securities markets; and
• Industry utilities.

In addition, FINRA regulates trading in:

• Corporate bonds,
• Equities,
• Securities futures, and
• Options.

FINRA Licensure

FINRA is responsible for licensing various individuals and entities. Specifically, FINRA licenses individuals and admits firms to the securities industry. In addition, FINRA is responsible for promulgating rules that govern the behavior of member firms and individuals, examining firms and individuals for compliance, and disciplining registered representatives and firms for failing to comply with federal securities laws and FINRA’s rules and regulations. FINRA’s licensure duties also consist of the administration of qualification examinations to professionals in the securities industry. Also, FINRA sells regulatory services and products to several stock exchanges and markets.

FINRA Examinations

As mentioned above, FINRA administers examinations to member firms and securities industry professionals. Annually, FINRA announces the criteria for upcoming examinations in its annual letter, which is a publication that impacts broker-dealers, banks, and affiliated insurance companies. 

FINRA Arbitration

Finally, one of FINRA’s major responsibilities is arbitration, which is a type of informal legal proceeding in which an arbitrator decides disputes between investors and members. Most agreements between investors and stockbrokers contain clauses that provide for the mandatory arbitration of disputes. FINRA operates the largest arbitration forum in the United States for the resolution of disputes between brokerage firms, their employees, and investors. If you are an investor who has lost money due to the improper actions of a financial professional, you may be entitled to financial compensation through the FINRA arbitration process.

Fort Lauderdale Investor Representation Attorney

If your financial professional’s negligent or fraudulent behavior has negatively affected your investment portfolio, you need an experienced investor representation attorney on your side. At Simms Law, P.A., we regularly represent investors in arbitration before FINRA. Our talented attorneys take our clients’ concerns seriously, and we are acutely aware of what’s at stake when an investor suffers losses in the financial markets. Therefore, if you require expert legal guidance in Florida, please contact us today for a consultation.