What It Means to Be Regulated by FINRA
Have you ever wondered who protects investors -- and how? If you invest, it can pay to know about FINRA, the Financial Industry Regulatory Authority. FINRA is a not-for-profit organization authorized under the federal securities laws and registered with the Securities and Exchange Commission (SEC). Alongside the SEC, FINRA oversees U.S. member broker-dealers and their personnel, including individuals who recommend or sell securities products to the public. FINRA's mission is protecting you, the investor, and ensuring the integrity of our country's securities markets.
A broker-dealer firm is in the business of buying and selling securities -- stocks, bonds, mutual funds and certain other investment products -- on behalf of its customers (as broker), for its own account (as dealer) or both. All broker-dealers that sell securities to the public in the U.S. must be registered with the SEC and be members of a registered securities association (currently, FINRA). FINRA members must meet extensive conduct, operational and financial requirements. FINRA, under the close supervision of the SEC, oversees its member firms' compliance with these requirements. In addition, individuals who are associated with member firms and who are engaged in the investment banking or securities business must be qualified and registered with FINRA. Other types of financial firms and individuals are not subject to FINRA oversight.
Membership in FINRA requires a significant commitment, including compliance with numerous safeguards designed to protect investors and the integrity of the securities markets. Here are a few aspects of what it means to be regulated by FINRA.
Source Fool.com
