What Is the Financial Industry Regulatory Authority?
June 14, 2022
At SIMMS LAW, P.A., we routinely represent aggrieved investors in arbitration before the Financial Industry Regulatory Authority (FINRA), a United States self-regulatory organization. FINRA represents the consolidation of the arbitration, member regulation, and operations of NASD, NYSE Regulation, Inc., and the New York Stock Exchange. FINRA, which is the largest independent regulator for all U.S. securities firms, regulates brokerage firms and exchange markets. FINRA’s primary mission is the protection of investors, and it aims to accomplish this goal by ensuring fairness and honesty in the United States securities industry. Below is an overview of the different functions of FINRA.
Some of the activities FINRA is involved in regulating include the following:
Securities arbitration and mediation;
Securities firms conducting business with the public;
Licensing, training, and testing of registered persons; and
Industry utilities, including trade reporting facilities and over-the-counter operations.
In addition to the above responsibilities, FINRA regulates trading in equities, corporate bonds, securities futures, and options. Firms that are not regulated by another SRO but that deal in securities are also required to be member firms of FINRA.
Licensure is another regulatory activity with which FINRA is tasked. Specifically, FINRA admits firms to the industry and licenses individuals. FINRA is also responsible for writing rules to govern the behavior of such firms and individuals, examining them for compliance, and disciplining registered representatives and member firms for noncompliance with FINRA’s rules and regulations and federal securities laws. FINRA’s licensure duties also involve administering qualification examinations to industry professionals. In addition, FINRA sells regulatory products and services to several markets and stock exchanges.
As noted above, a portion of FINRA’s regulatory authority includes the administration of examinations to its regulated institutions. FINRA routinely outlines the criteria for upcoming examinations in its annual letter, which is a publication impacting banks, broker-dealers, and their affiliated insurance companies.
Importantly, FINRA offers the preeminent arbitration forum for securities dispute resolution. Through arbitration, a neutral arbitrator, or panel of arbitrators, hears both sides of a dispute and issues a decision. A majority of agreements between stockbrokers and investors contain mandatory arbitration clauses. FINRA operates the biggest arbitration forum in the country for the purpose of dispute resolution between brokerage firms, their employees, and their customers.
At SIMMS LAW, P.A., one of our primary focuses is the representation of investors. The financial markets can result in great gains and losses, so expert legal representation is a must when attempting to navigate this complex area. At SIMMS LAW, we represent investors nationwide, always take our clients’ concerns seriously, and are aware of what is at stake when an investor suffers losses in the financial markets. Therefore, if you require expert legal guidance, please contact us for a consultation.