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What is FINRA? Part 2 – What Does FINRA Do?

By Jonah A. Toleno of Shustak Reynolds & Partners, P.C. posted on Friday, September 6, 2019.

WHAT IS FINRA?

In Part 1 of this blog series, we established that FINRA (the Financial Industry Regulatory Authority), formerly known as the National Association of Securities Dealers (NASD), is a self-regulated organization (“SRO”) that engages in multiple functions in the financial services and securities industry. Our firm represents entities and individuals in varying capacities before FINRA. Many of our clients understand FINRA’s functions based on their individual experience with the organization. But not all who encounter FINRA are aware of its role, functions, or purpose in the financial sector. This is the second of a series of posts explaining the various activities and functions in which FINRA regularly engages.

WHAT DOES FINRA DO?

In Part 1, we explored FINRA’s mission, which it has stated is to “safeguard the investing public against fraud and bad practices.” [1]

FINRA employs principles to execute this mission through its “Five Steps to Protecting Market Integrity." [2] Those five steps as articulated by FINRA on its website are to:

  • Deter misconduct by enforcing the rules;

  • Discipline those who break the rules;

  • Detect and prevent wrongdoing in the U.S. markets;

  • Educate and inform investors; and

  • Resolve securities disputes

FINRA, acting in its capacity as an SRO, engages in the above steps to carry out its stated mission. In our next blog post on this topic, we will explore Step 1, including what FINRA specifically does to deter misconduct and enforce its rules and who is affected by such FINRA action.

Our firm is primarily engaged in FINRA’s Step 5, above, helping resolve securities disputes by representing individuals and firms affected by FINRA’s oversight, including financial advisors, brokers, investment advisors, financial services firms and investment advisory firms, and defrauded investors seeking to recover investment funds. If you have an investment, employment, trade secret, or broker transition situation you’d like to discuss with our firm, give us a call at (619) 696-9500 and look us up at https://www.shufirm.com.

Partner Jonah A. Toleno is based in our San Diego, California office. She practices in securities and financial services law and acts as trial counsel and outside corporate counsel for numerous financial, business, and individual clients. She can be reached at (619) 696-9500 or [email protected] with questions.



 
 

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