Financial Industry Regulatory Authority

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The Financial Industry Regulatory Authority ( FINRA ), as the licensing authority in the USA, is primarily responsible for the supervision of persons involved in the securities industry . The Securities and Exchange Commission (SEC for short) delegated this responsibility to FINRA. FINRA is a self-regulatory organization (SRO for short) and is therefore not a direct government agency. It is based in Washington, DC

FINRA is an amalgamation of the National Association of Securities Dealers (NASD), the law enforcement agency of the New York Stock Exchange (NYSE) and the NYSE regulator. The merger was finalized on July 26, 2008.

All companies that trade in securities that are not regulated by another SRO, such as the Municipal Securities Rulemaking Board, or MSRB for short, must be a member of FINRA. Persons licensed to publicly trade in securities are also known as registered commercial agents.

The regulation of the securities industry is intended to uphold ethical practices that are in the best interests of consumers for everyone who works in the securities industry. To enforce this, FINRA has the right to impose fines on member companies and registered commercial agents who have broken the rules. To this end, FINRA is very useful to the industry as it builds public trust and advocates their interests. The sole financing of FINRA, however, is provided by the fines and fees of the member companies. This fact has been criticized for the fact that it creates an incentive for FINRA to impose fines on companies for a variety of reasons, solely for the costs of the investigation, even if no serious violations could be detected.

Web links

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  1. FINRA history http://www.finra.org/AboutFINRA/index.htm