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All reviews are prepared by our staff. Opinions expressed are solely those of the reviewer and have not been reviewed or approved by any advertiser. The information, including any rates, terms and fees associated with financial products, presented in the review is accurate as of the date of publication. SHARE: SOPA Images/Getty Images September 08, 2022 Roger Wohlner is a contributing writer for Bankrate. Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Bankrate logo The Bankrate promise
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Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our investing reporters and editors focus on the points consumers care about most — how to get started, the best brokers, types of investment accounts, how to choose investments and more — so you can feel confident when investing your money. Investing disclosure: The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice. Investment decisions should be based on an evaluation of your own personal financial situation, needs, risk tolerance and investment objectives. Investing involves risk including the potential loss of principal. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. Financial Industry Regulatory Authority, or FINRA, is a self-regulatory organization authorized to regulate U.S. stockbrokers and broker-dealer firms. Brokers must be registered with FINRA in order to execute trades on behalf of their clients. Here are the key details about this organization, including some of its benefits and how it differs from the (SEC). What is the Financial Industry Regulatory Authority FINRA
FINRA is a non-governmental, self-regulatory organization that enforces various rules governing the operations and conduct of brokers and broker-dealer firms in the United States. FINRA oversees around 3,400 securities firms with about 150,000 branch offices. This includes about 612,000 registered securities professionals as of 2021. FINRA itself has 19 offices across the U.S. with some 3,600 employees. FINRA has enforcement powers over the brokers and firms it regulates. This includes the power to levy fines and sanctions against those who violate its rules. These sanctions can include suspensions and even debarments from the industry in some cases. FINRA also maintains the database of brokers and investment and financial advisors. This is a searchable online database that includes information about members’ certifications, education and any enforcement actions that have been taken against them. History of FINRA
FINRA was created in 2007 as a combination of the National Association of Securities Dealers (NASD) and the member enforcement, regulation and arbitration operations of the New York Stock Exchange (NYSE). The creation of FINRA was approved by the SEC. Benefits and criticisms of FINRA
FINRA offers a number of benefits for investors, though the organization has its critics as well. Benefits
Benefits associated with FINRA include: The regulation and oversight of brokers and firms in one place. FINRA registered brokers must complete annual educational requirements. They can face disciplinary action if they are not in compliance with FINRA’s rules. The BrokerCheck database offers a “one stop shop” for consumers looking to check up on brokers, advisors and firms. Violations and sanctions are listed, as well as broker and advisor education levels. FINRA offers consumers an avenue to file complaints against brokers or firms. FINRA will investigate the claim and take action as appropriate. FINRA offers a dispute resolution platform for arbitration and mediation between customers and brokers as an alternative to going to court. FINRA offers a wealth of resources for investors and consumers from beginners to advanced levels of experience. These include articles, calculators and other resources. FINRA monitors financial markets including transactions and orders on a daily basis to help ensure market integrity for investors. Criticisms
Along with the positive aspects of FINRA, some criticisms of the organization include. As with any self-regulatory organization, FINRA has been criticized for not doing enough to protect investors. Among the vocal critics of FINRA are U.S. Senators Elizabeth Warren of Massachusetts and Tom Cotton of Arkansas. There have been a number of repeat offenders among brokers who have committed acts of misconduct. Some have criticized FINRA as having an inherent conflict of interest due to its ties to the industry. Difference between FINRA and the Securities and Exchange Commission
While the SEC and FINRA both play a role in regulating the U.S. financial industry, these roles and the scope of each organization’s powers are different. The SEC is a governmental agency formed in the midst of the Great Depression as part of the Securities Act of 1933 and the Securities Exchange Act of 1934. The SEC can bring civil cases against offenders and can work with the Justice Department to bring criminal actions as well. In contrast, FINRA is a non-governmental self-regulating organization, and its sphere of influence is limited to the brokerage industry. This chart outlines key differences between the two organizations. FINRA SEC Type of organization Self-regulatory Governmental entity Focus Regulation of brokers and firms within the brokerage industry Regulation of the financial markets, individual securities and broad enforcement of securities laws. Other duties and functions Administers BrokerCheck database and offers educational resources to investors. Fields and addresses complaints about FINRA member brokers and firms. Provides an arbitration forum as an alternative to going to court to settle disputes. Has the power to take legal action to enforce securities laws. Ensures the accuracy of information regarding publicly traded securities. One way the differences have been described is that FINRA deals more with the human aspect of regulation. It regulates individual brokers and brokerage firms. Meanwhile, the SEC can also discipline advisors, brokers and others. But the SEC’s scope extends well beyond this, and it’s in charge of regulating the bulk of the U.S. securities industry and the financial markets. Bottom line
FINRA is a key player in the financial regulatory space. Brokers and brokerage firms must be FINRA registered. In its mission to protect investors, FINRA has a broad range of disciplinary powers, including the power to suspend or expel violators from selling securities. FINRA is a self-regulatory organization that was created from a combination of then existing organizations in 2007. However, unlike the SEC, FINRA does not have the power to bring criminal actions against violators. Also, FINRA’s scope is more limited than that of the SEC. SHARE: Roger Wohlner is a contributing writer for Bankrate. Bankrate senior reporter James F. Royal, Ph.D., covers investing and wealth management. His work has been cited by CNBC, the Washington Post, The New York Times and more. Related Articles