Learn how the organization protects you as an investor
If you have been investing for a while or you follow news about the securities industry, you have probably heard about the Financial Industry Regulatory Authority, also known as FINRA. Though not a part of the government, FINRA is given authority by Congress to ensure the “broker-dealer industry operates fairly and honestly.” FINRA employs more than 3,500 people, but because it is a nonprofit, no taxpayer money is used to keep the organization running.
What does FINRA do?
FINRA plays an important role in our financial system. Its goal is to maintain high ethical standards in the securities industry, offer the best resources for regulation, and enhance both safeguards for investors and the overall integrity of the market. They do this by:
Enforcing their rules
Every broker and brokerage firm in the U.S. is obligated to adhere to the rules set by FINRA, and the agency routinely examines them to determine if they are in compliance. FINRA also makes sure that all brokers are licensed and registered and that they pass their qualification exams and meet continuing education requirements. In addition, broker advertisements, websites, and other communications are looked at to see if the information is presented fairly and is not misleading.
Disciplining brokers and firms that break the rules
If FINRA discovers that a broker has violated their rules, they can face severe sanctions, which could include a fine, suspension, or even a permanent bar from the industry. Last year, the organization brought over 1,400 disciplinary actions against brokers and firms, with fines totaling $176.3 million. Affected investors received almost $28 million in restitution.
Searching for wrongdoing
Using technology and different data collecting techniques, FINRA can detect potential unlawful activity across markets. On an average day, 37 billion transactions are processed by FINRA. The agency also works with the SEC and other government bureaus in order to stop possible fraud.
FINRA offers an assortment of tools and resources to investors so they can make smart decisions with their money. These include:
- The FINRA Investor Education Foundation, which teaches investors how to protect themselves from fraud
- BrokerCheck, a resource that has information about the professional background and history of both brokers and firms
- Market Data Center, where investors can learn about financial instruments, such as data on bond market activity from the Trade Reporting and Compliance Engine
- Fund Analyzer which lets investors compare fund expenses
- Risk Meter a tool that allows investors to see if they could be vulnerable to investment fraud
- Scam Meter, which – by answering four questions – can help investors determine if an investment opportunity is too good to be true
If an issue arises between a broker and an investor, FINRA uses a dispute resolution forum designed to solve problems. The largest of its kind in the U.S., this forum handles almost all of the securities-related arbitrations in all 50 states, along with Puerto Rico and London.
While FINRA is an important safeguard for investors, it isn’t foolproof; unscrupulous brokers and firms are always trying to figure out how to skirt their rules in order to profit. If you believe that you were the victim of fraud or another action that resulted in the loss of money, FINRA securities arbitration could help you get it back, but it is important to talk with an arbitration attorney as soon as possible.
The Silver Law Group has been working to get lost funds back to investors for years, and we’ve helped recover millions of dollars. To learn what we may be able to do for you and to get a free consultation, give us a call at 800-975-4345 or just fill out our online contact form. The Silver Law Group is a contingency-based firm, which means if you don’t get money back, you will not owe us anything.