FINRA is an organization that is responsible for overseeing the activities of security firms and security brokers that are part of the organization. The United States Congress authorized FINRA to assist in the regulation of various aspects of the financial industry in the United States. The primary goal of FINRA is to drastically decrease the chances for unscrupulous organizations or people who attempt to take advantage of investors with honest intentions. FINRA accomplishes this by strategically overseeing those who are part of various financial markets.

Organizational Structure

The Board of Governors

The organization is headed by the Chief Executive Officer of NYSE Regulations as well as 11 individuals who are known as Public Governors. In addition, 10 other Governors, which include a Floor Member Governor, Independent Dealer, three Small Firm Governors, a Mid-Size Firm Governors, and three Large Firm Governors also head the organization, and these individuals are elected into their positions by other FINRA members.

Core Functions and Responsibilities

Monitor

Another primary function of FINRA is to properly monitor financial markets, which is to immediately determine if any fraudulent behavior is taking place. FINRA has the technical capability and staff to accurately program a specific analysis of different financial markets that helps them detect when any kind of actions in the financial markets are associated with fraudulent behavior.

Investor Education is a Must

The organization has proven the most effective manner to keep public investors safe from fraudulent behavior is to provide them with educational tools and services. These keep investors informed about investments and recognizing behavior that is seen as unethical. FINRA uses these interactive tools and educational resources to help honest investors easily detect when they are being subjected to a scam, and it can also assist investors with correctly analyzing funds. The organization’s database is open to investors, which helps them easily recognize if they are dealing with an individual who isn’t properly licensed.

Regulatory Enforcement

Compliance Enforcement

Both licensed, registered brokers and brokerage firms that are part of the regulatory authority must agree to adhere to the by-laws issued by FINRA. The purpose of these by-laws is to explain the rules that relate to how a brokerage firm is operated and how firms promote investment products. If an investor files a complaint with FINRA, which involves suspicious activity of a brokerage firm, FINRA will promptly begin an investigation into the alleged fraudulent behavior of a brokerage firm or any of its members.

What About Investment Rules?

The organization is also responsible for developing investment rules for individuals who are active in the security industry. These rules were established based on data form different areas within the industry, which may include member brokers, investors, the SEC, independent brokers, and more. When it is needed, FINA will establish new rules dealing with proper investment behavior. These rules are presented to the Financial Industry Regulatory Authority Committee for review. Lastly, the new rules will be presented to the SEC for a final review before they become official.

Dispute Resolution

Arbitration

FINRA operates the largest platform that is designed for arbitration. It is structured to provide individuals with personal investment solutions, and it can provide solutions between brokerage firm members and their investors. A clause that concerns mandatory arbitration will be included in all of the agreements that will state the relationship between the investor and the brokerage firm or broker. As a result, investors are required to waive all their rights to action and will require that any disputes be settled using arbitration. However, it may still be possible for class action cases to be allowed to move forward with court proceedings. In addition, there are certain situations were arbitration contracts will be rejected.

Organization Structure and Legal Support

The organization is based out of two separate headquarters that are located in Washington, D.C. and New York City. The organization also has 20 locations in various cities throughout the United States. The United States Congress is accountable for the authorization of activities designated by FINRA. The organization continues to remain a self-regulated agency, and it develops and maintains extremely high standards for its representatives and brokers. If you need help with any aspect regarding FINRA, contact a skilled defense attorney who understands the law and can provide you with guidance.