Understanding FINRA: How It's Structured and Its Primary Functions and Responsibilities
The Financial Industry Regulatory Authority (FINRA) is one of the most crucial institutions in the financial sector. FINRA is a nonprofit organization that has been given permission by Congress to safeguard investors by upholding the fairness of the financial markets. This blog article will examine the organizational structure of FINRA as well as its main duties and operations.
FINRA is governed by a Board of Governors, which is responsible for overseeing the organization's activities and ensuring that it fulfills its mission to protect investors. The Board is composed of both public and industry members, and its decisions are guided by FINRA's rules and regulations.
FINRA is divided into three main departments:
This department is responsible for enforcing FINRA's rules and regulations by investigating potential violations, bringing disciplinary actions against firms and individuals who violate those rules, and imposing sanctions when necessary.
Registration and Disclosure
The Registration and Disclosure division is in charge of registering businesses and individuals who work in the securities sector, keeping track of their activities, and disseminating data to investors via FINRA's BrokerCheck system.
This division is in charge of monitoring, looking into, and enforcing FINRA rules regarding market manipulation, insider trading, and other fraudulent acts as they relate to the trading and market activities of FINRA member firms.
FINRA’s Primary Functions and Responsibilities
FINRA's primary mission is to protect investors by ensuring that the financial markets are fair, transparent, and honest. FINRA accomplishes this through a variety of means, including enforcing its rules and regulations, providing investor education and resources, and monitoring the activities of member firms.
Regulating Member Firms
FINRA regulates more than 3,000 member firms that participate in the securities industry, including broker-dealers, investment advisers, and other financial professionals. FINRA's rules and regulations cover a wide range of activities, including registration and licensing, sales practices, advertising, and supervision.
Promoting Market Integrity
FINRA is responsible for promoting market integrity by overseeing the trading and market activities of member firms. This includes monitoring for potential market manipulation, insider trading, and other fraudulent activities, and taking enforcement actions when necessary.
Investors and investment professionals now compete on an even playing field because of reforms made by FINRA to the arbitration procedure.
Investments don’t always go as planned, and flawed investment strategies can lead to serious losses. While all investments carry risks, when the losses are due to negligence or fraud, the investors may be able to hold their broker accountable.
If you have experienced financial setbacks due to a fraudulent broker, turn to Weltz Law. We have decades of experience and know how to guide clients through FINRA arbitration and securities litigation.