Wednesday’s Word: FINRA

By Siri Yellamraju, Spring 2016 Student Intern

The world of investments and finance have some really scary words. In fact, I think they would be much easier to understand if the words were descriptive and not so flowery and grandiose. This Wednesday’s Word is a bit simpler than the ones in the past: FINRA!

Before joining the Investor Advocacy Clinic, I had no idea who FINRA was. On my first day, however, I learned that all of the claims we work on are filed through FINRA. FINRA stands for “Financial Industry Regulatory Authority.” Unlike the Securities and Exchange Commission, FINRA is not a part of the government. It is an independent, non-profit, self-regulatory organization that is authorized by Congress to oversee the securities industry.

FINRA was founded in 2007 by approval of the SEC by joining two pre-existing self-regulatory organizations: National Association of Securities Dealers, Inc. (NASD) and the member regulation and enforcement and arbitration functions of the New York Stock Exchange.

FINRA’s goal is to provide investors with fair financial markets. Their functions include regulating sellers of securities products by making sure they are tested, qualified and license. They regulate advertising of securities, ensuring investors have complete disclosure about an investment product. FINRA works to make sure every investor has basic protections and feels safe and confident about investing their money.

FINRA also operates a few online resources to educate and protect investors. One of these is Investor Alerts. FINRA releases statements to investors educating them about a scheme or even common mistakes investors make in order to prevent broker misconduct. They are also active on social media, have a complaint center, whistleblower tip-line and a Securities Helpline for Seniors.

According to the FINRA website, in 2015, they brought 1,512 disciplinary actions against registered individuals and firms which resulted in fines totaling $95 million and ordered restitution of $96.6 million to harmed investors.

FINRA is the sheriff of the financial industry and a force to be reckoned with.