The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization (SRO) established in 2007, with the merger of the National Association of Securities Dealers (NASD) and the regulatory arm of the New York Stock Exchange (NYSE). It is a non-governmental body that has been given permission by Congress to control the US securities market. In the US market, FINRA is in charge of monitoring and policing the conduct of securities companies, brokers, and dealers.
By ensuring that the securities industry functions fairly and openly, FINRA's primary goal is to protect investors. Setting guidelines and norms to control the behavior of brokerage houses, brokers, and dealers is part of this. Also, FINRA keeps an eye on the market for any unethical or illegal activity and takes the necessary precautions to stop it or punish them.
FINRA's regulatory activities are aimed at promoting market integrity and investor protection, through the enforcement of rules and regulations that ensure that securities firms operate fairly and ethically. FINRA has the authority to investigate and prosecute firms and individuals that violate its rules, as well as the power to impose fines, suspend or revoke licenses, and bar individuals from the securities industry.
FINRA's regulatory oversight covers a wide range of areas, including securities trading, sales practices, advertising, anti-money laundering, financial reporting, and more. FINRA also sets professional standards for brokers and dealers, including licensing and continuing education requirements, as well as maintaining an arbitration forum to resolve disputes between investors and securities firms.
As of 2016, FINRA oversaw more than 4,500 brokerage firms, approximately 160,000 branch offices, and more than half a million registered securities representatives. This makes it the largest self-regulatory organization in the world, in terms of the number of firms and individuals it regulates.
FINRA operates independently of the US government and is overseen by the Securities and Exchange Commission (SEC). The SEC provides oversight and guidance to FINRA, but FINRA has its own board of directors and is funded by fees collected from its member firms.
One of the key responsibilities of FINRA is to ensure that securities firms and brokers are in compliance with its rules and regulations. FINRA conducts regular inspections and examinations of firms to ensure that they are operating in compliance with its rules. It also investigates complaints and tips from investors and other sources to identify potential violations of its rules.
In addition to its regulatory activities, FINRA provides a wide range of educational resources and tools to help investors make informed decisions about their investments. FINRA's website includes a variety of resources, such as investor alerts, educational articles, and calculators, as well as information on how to find a broker or check the background of a broker or firm.
FINRA's arbitration forum is an important resource for investors who have disputes with their brokers or securities firms. The forum provides a fair and impartial process for resolving disputes, and its decisions are binding. Investors can use the forum to seek damages, as well as to request other remedies, such as rescission or reformation of a contract.
Overall, FINRA plays a critical role in regulating the US securities industry and promoting investor protection. Its rules and regulations help to ensure that securities firms and brokers operate fairly and transparently, and its educational resources help to empower investors to make informed decisions about their investments. As the largest self-regulatory organization in the world, FINRA has a significant impact on the global securities industry, and its oversight helps to maintain the integrity and stability of the US market.
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