Financial Industry Regulatory Authority

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Financial Industry Regulatory Authority

Founded	2007 (replaces NASD)
Headquarters	Washington, D.C./New York City, with 15 district offices
Products	Regulation of U.S. securities firms
Web site	http://www.finra.org/

The Financial Industry Regulatory Authority (FINRA), is the largest non-governmental regulator for all securities firms doing business in the U.S. FINRA oversees nearly 5,100 brokerage firms, about 174,000 branch offices and more than 672,000 registered securities representatives.

1 History
2 FINRA Services
3 FINRA Leadership
4 BrokerCheck
5 Rules to Expunge Brokers' Records
6 Educational Requirements/Initiatives
7 Resources
8 References

History

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FINRA was created through the consolidation of the National Association of Securities Dealers (NASD) and the member regulation, enforcement and arbitration functions of the New York Stock Exchange, and went into operation on July 30, 2007.^[1]

FINRA Services

FINRA's charter is one of investor protection and the maintenance of market integrity through "effective and efficient regulation and complementary compliance and technology-based services."

With about 3,000 employees, FINRA operates from Washington, DC, and New York, with 15 district offices across the United States.

The scope of FINRA's services include registration and education of industry participants; examining securities firms; writing rules and enforcing those rules in addition to federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering dispute resolution forums for investors and registered firms.

FINRA also performs market regulation under contract for The NASDAQ Stock Market, the American Stock Exchange, the International Securities Exchange and the Chicago Climate Exchange.

FINRA Leadership

Mary L. Schapiro, is FINRA's chief executive officer, a member of FINRA's board of governors, and chairman of the FINRA Investor Education Foundation.

Richard Ketchum, chairman and chief executive officer of NYSE Regulation, is the non-executive chairman of the board of governors for FINRA.

Others FINRA staff include: Senior Executive Vice President Stephen Luparello, who oversees the FINRA's member regulation, enforcement and market regulation functions; Vice Chairman Doug Shulman, who oversees the organization's strategy and planning, market transparency services, testing and continuing education, registration and disclosure, technology operations and member relations; Senior Executive Vice President Elisse Walter, who oversees investment company regulation, investor education, corporate finance, emerging issues, advertising regulation and member education; and, Linda Fienberg, who serves as president of dispute resolution and chief hearing officer; Executive Vice President Susan Merrill heads the Office of Enforcement. Member Regulation is comprised of two separate departments, with Executive Vice President Grace Vogel heading up the Department of Risk Oversight and Operational Regulation and Executive Vice President Robert Errico leading the Department of Sales Practice Regulation.

BrokerCheck

FINRA has created an online service known as "BrokerCheck,"^[2] which provides information about current and former FINRA-registered firms. It also provides information about individuals who are currently FINRA-registered or have been registered with FINRA within the last two years as well as about firms who are currently or in the past registered with FINRA. The service allows investors to learn, among other things, whether a broker is licensed in the investor's state to conduct business or whether he/she has been sanctioned by securities regulators for violations of investment-related regulations or statutes.

Rules to Expunge Brokers' Records

A new rule, approved in December 2007, requires arbitrators to undertake a more rigorous review of a broker's request to expunge their record on the Central Registration Depositary (CRD) after an arbitration claim.^[3]

Under this rule, arbitrators are required to hold a recorded hearing session by phone or in person and provide a brief written explanation of reasons for ordering an expungement. In cases involving a settlement, where the agreement requires the client to consent to a request for an expungement, arbitrators are now required to consider the settlement terms, including amounts paid to any party.

FINRA indicates that the rule is designed to assure that any expungement of complaints is limited to certain situations. Under Conduct Rule 2130, arbitrators can only order expungement if the claim, allegation or information in the dispute is factually impossible or clearly erroneous; if the registered person was not involved in the alleged misconduct; or if the claim, allegation or information is false.

Educational Requirements/Initiatives

Continuing education for registered persons and broker-dealers: Together with other self-regulatory organizations and the Securities Industry/Regulatory Council on Continuing Education, FINRA administers a two-part mandatory continuing education program. The program consists of a regulatory element and a firm element. The regulatory element requires all registered persons to take computer-based training in industry rules and regulations on the second anniversary of their initial securities registration and every three years after that. The firm element requires broker-dealers to keep their "covered persons" – employees who deal with customers, and their supervisors – up to date on job - and product-related subjects by way of an annual firm-developed and administered training program.

FINRA podcasts are a series of podcasts, issued frequently, that highlight news, regulatory updates and other compliance topics. FINRA has created podcasts as a convenient way to get compliance-related information into the hands of compliance professionals. Podcasts cover compliance topics, updates and speeches. Those interested in hearing these audio reports can listen either from their desktop computer or can download to a portable digital media player.

For Investors: The FINRA Investor Education Foundation is the largest foundation in the United States dedicated to investor education. As of June 2007, the Foundation had approved $10.4 million in grants and an additional $10.2 million in direct investor education programming. FINRA also is a founding member of the Alliance for Investor Education. ^[4]

In 2007 FINRA Investor Education Foundation grants exceeded $14M for programs and researh projects aimed at the investing public.^[5]