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Mar 24, 2018

FINRA Investigations Defense Lawyer

Financial Industry Regulatory Authority (FINRA) Overview of Organization’s Purpose and Functions

The Financial Industry Regulatory Authority (FINRA) ensures that there’s market integrity while it protects investors by efficiently regulating broker-dealers. The organization is non-profit and independent of the government. It was authorized by Congress to ensure that the broker-dealer industry is fair and honest in the execution of its affairs. Its functions are very distinct from those carried out by the Securities Exchange Commission (SEC). SEC enforces laws that relate to the financial markets while FINRA oversees the activities of securities brokers and firms. This organization plays a major role in ensuring that unscrupulous businesses do not mislead investors.

FINRA is able to fulfill its mandate by carrying out the functions listed below:

• By formulating and enforcing rules that govern the activities of 3,700 broker-dealers with 630,000 brokers
• Through examination of firms to ensure they are compliant.
• By nurturing market transparency

The high ethical standards that FINRA enforces play a vital role in the financial system. This extends further to the provision of resources and expertise that’s required in enforcing market integrity. All this functions are carried out without a cost for the taxpayers. This activities are the main foundations upon which the fair financial markets are laid on. FINRA also testes, qualifies and licenses anyone selling securities products. It also ensures that advertisements for securities products are truthful.

Registered firms and brokers faced the wrath of FINRA after 1369 disciplinary actions were administered against them. A total of $66.8 million was also collected in fines. The organization also ordered $66.8 million in restitution to the affected investors. SEC and other concerned agencies received 850 insider trading and fraud cases for hearing.

FINRA deploys technology that enables it to detect fraud, monitor U.S. equities markets, and oversee the brokerage firms. All this serves to ensure investors protection. This regulatory body has more than 3,000 employees scattered around North America. There are also 20 regional offices across the country for its employees. Around 4,250 brokerage firms and approximately 629,525 registered securities representatives are overseen by FINRA.

A consolidation of the arbitration, member regulation, and enforcement operations of the New York Stock Exchange, NYSE Regulation, Inc., and NASD led to the formation of FINRA.

The main strategies that FINRA deploys in protecting investors and overseeing the securities markets are divided into four categories:

Educating and Protecting Investors – there are several projects that FINRA has pursued with the aim of educating people on investments. It also conducts an arbitration program that allows investors to successfully go through the mediation process.

Registration of Broker-Dealer – FINRA has to register companies that wish to sell securities for them to be considered licensed. Failure to which firms attract fines and penalties.

Examinations and Securities Licensure – FINRA conducts background checks on over 600,000 personnel in the U.S. to scan for criminal records. Personnel must be licensed before they conduct securities transactions.

Recordkeeping – Large amounts of extensive records are stored by FINRA, this includes any disciplinary actions that are taken against a representative. The records are available to the public on FINRA’s website.