What Does the Financial Industry Regulatory Authority Do, Exactly?When an investor is the victim of securities fraud or negligence, he or she can bring a claim for damages against the broker, advisor or firm. Much of the time, the case will be heard in front of an arbitration panel; this is because many investors have contracts that stipulate arbitration or medication to resolve problems, as opposed to pursing litigation. Investors pursing damages through arbitration, then, will almost inevitably come into contact with the Financial Industry Regulatory Authority, or FINRA.

FINRA is an independent, regulatory agency out in place to protect investors. They ensure that the more than 4,500 brokerage firms, 163,000 branch offices, and 630,000 registered securities agents under their oversight are doing what is best for investors by:

  • Licensing and registering brokers and firms to sell securities
  • Conducting audits on members and firms to ensure they are in compliance with FINRA regulations
  • Investigating violations that have been or were alleged to have been committed
  • Bringing disciplinary actions against wrongdoers
  • Investigating complaints and tips regarding securities fraud, through the Office of Fraud Detection and Market Intelligence
  • Providing information and educational opportunities to members to ensure that they can protect their clients’ interests
  • Managing arbitration panels, and training arbitrators

FINRA vs. the SEC

Both FINRA and the Securities and Exchange Commission (SEC) help to regulate the securities market, but they approach this work in different ways. FINRA oversees brokers and brokerages, and makes sure they comply with federal law. They are a completely independent body, though they report to the SEC.

The SEC, which is a governmental regulatory body, is the group that creates those federal laws. Its mission “is to protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation. The SEC strives to promote a market environment that is worthy of the public’s trust.” In other words, the SEC creates and enforces the laws, which keeps the securities market operating as it should.

Regulatory bodies like these are designed to help investors; attorneys like those of us at The Frankowski Firm are here to do the same. If you have been a victim of securities fraud or broker negligence, we may be able to help. To learn more about our services, or to schedule a consultation with an experienced FINRA arbitration attorney, please call 888.741.7503, or fill out our contact form.