FINRA (Financial Industry Regulatory Authority) is a non-governmental self-regulatory organization (SRO) authorized by Congress under the Securities Exchange Act of 1934 to oversee U.S. broker-dealers and their registered representatives.
FINRA's key functions: - Write and enforce rules governing broker-dealer conduct. - Examine firms for compliance with FINRA and SEC rules. - License and register broker-dealers and registered representatives (via FINRA Firm Gateway and CRD system). - Operate BrokerCheck — a public database of broker and firm registration/disciplinary history. - Operate arbitration and mediation forums for investor disputes. - Administer licensing exams (SIE, Series 6, 7, 63, 65, 66, etc.).
SRO hierarchy: The SEC has ultimate authority over FINRA. FINRA has authority over member firms and their associated persons.
FINRA vs. SEC:
| | FINRA | SEC | |---|---|---| | Type | SRO (private, non-profit) | Federal government agency | | Authority | Broker-dealers and reps | All securities participants | | Exams | Administers licensing exams | Sets exam requirements |
BrokerCheck: Investors can search any registered broker or firm's background, licenses, and disciplinary history at BrokerCheck.finra.org.
> Exam tip: FINRA is the SRO for broker-dealers. Know that FINRA rules are subject to SEC approval. Municipal brokers follow MSRB rules enforced by FINRA. Investment advisers are regulated by the SEC or states — not FINRA.