Finserv Glossary


Table of Contents

What is Financial Industry Regulatory Authority (FINRA)?

naehas glossary finraThe Financial Industry Regulatory Authority (FINRA) is dedicated to protecting investors and safeguarding market integrity in a manner that facilitates vibrant capital markets.

The Authority operates in 19 offices with 3,600 employees deployed throughout the country.

FINRA plays a critical role in ensuring the integrity of America’s financial system — all at no cost to taxpayers. Working under the supervision of the Securities and Exchange Commission, its staff:

Write and enforce rules governing the ethical activities of all registered broker-dealer firms and registered brokers in the U.S.

Examine firms for compliance with those rules

Foster market transparency

Educate investors

FINRA regulates Broker-Dealers, Capital Acquisition Brokers, and Funding Portals, defined as follows: a Broker Dealer is in the business of buying or selling securities on behalf of its customers or its own account or both; a Capital Acquisition Broker is a Broker Dealer subject to a narrower rule book; a Funding Portal is a crowdfunding intermediary.

Created to protect investors and ensure the market’s integrity, FINRA is, according to its website, a government-authorized not-for-profit organization that oversees U.S. broker-dealers.

naehas glossary finra 1It works to ensure that everyone can participate in the market with confidence, ensuring every investor receives the basic protections they deserve; anyone who sells a securities product has been tested, qualified and licensed; every securities product advertisement used is truthful, and not misleading; any securities product sold to an investor is suitable for that investor’s needs; and investors receive complete disclosure about the investment product before purchase.

FINRA is authorized by Congress to protect America’s investors by making sure the broker-dealer industry operates fairly and honestly. It oversees more than 624,000 brokers across the country—and analyzes billions of daily market events.

FINRA’s Board and Committees

FINRA’s Board is composed of 21 industry and public members, and is authorized to appoint committees to facilitate and assist in the execution of the Board’s responsibilities.

FINRA has 12 advisory committees that provide feedback on rule proposals, regulatory initiatives and industry issues. There are 5 Regional committees that advise FINRA on industry trends of regulatory concern and provide input on the impact of FINRA’s regulatory programs.

In addition, FINRA departments create specific subject-matter committees as needed to consult on various issues.