FINRA – Protecting and Educating Investors

FINRA – Financial Industry Regulatory Authority, Inc. – is contracted by brokerage firms and trading markets to perform the function of market regulation in the United States, with the aim of maintaining market integrity and protecting investors by means of efficient regulation, ensuring compliance and technology-based services. It is a common misconception that FINRA is a government entity, when in fact it is a private corporation. It is the largest independent regulator for all securities conducting business in the US, with close to 4,700 brokerage firms, approximately 167,000 branch offices and roughly 635,000 registered securities representatives under its wing. Major exchanges contracting FINRA to oversee market regulation include the American Stock Exchange, the NASDAQ Stock Market, the Chicago Climate Exchange and the International Securities Exchange.

With its main offices located in Washington DC and New York City, FINRA employs around 2,800 people and has 15 district offices strategically placed around the United States. Functions which FINRA performs address virtually every aspect of the securities industry, including writing and enforcing rules as well as ensuring compliance with federal securities laws; registering and educating members; offering education and resources to private investors and members of the public; administering dispute resolution related to investors and registered firms; providing trade reporting and other securities industry resources. With regard to dispute resolution, virtually all investor-stockbroker agreements include arbitration clauses whereby both parties waive their right to take disputes to a court of law. Decisions made by a FINRA appointed arbitration panel are deemed to be legal and binding.

Individual investors can make use of the extensive educational resources available from FINRA to assist in building knowledge for making sound investment decisions, as well as keeping pace with the fast-moving world of investing in an environment which is increasingly taking on the characteristics of a global village. With the conviction that investor protection begins with education, as at April 2009 FINRA had sponsored investor education and resources, as well as investor protection initiatives, to the tune of $46 million. FINRA also keeps investors informed with regard to investment scams and questionable brokers. Further steps taken by FINRA to ensure that securities firms and brokers comply with rules, include routine examinations of registered members; investigations into complaints made and the fining, barring or suspending of brokers should the need arise; and returning money to investors who have been victims of foul play.