FINRA
FINRA (Financial Industry Regulatory Authority) is a self-regulatory organization that oversees broker-dealers and their registered representatives in the United States.
The Financial Industry Regulatory Authority, commonly known as FINRA, was created in 2007 through the consolidation of the regulatory functions of the National Association of Securities Dealers (NASD) and the member regulation operations of the New York Stock Exchange. Although it is a private nonprofit organization rather than a government agency, FINRA operates under the oversight of the SEC and has the authority to write and enforce rules governing the conduct of its approximately 624,000 registered representatives and more than 3,400 member firms.
FINRA's regulatory mandate covers a wide range of brokerage activities. It oversees the registration and licensing of brokers through examinations such as the Series 7 (General Securities Representative) and Series 63 (Uniform Securities Agent State Law) licenses. Before an individual can sell securities to the public, they must pass the relevant FINRA examinations and be registered with FINRA through their employing firm.
The organization also operates the BrokerCheck database, a free public tool that allows investors to research the professional backgrounds, credentials, and disciplinary histories of brokers and brokerage firms. BrokerCheck reveals whether a broker has faced complaints, arbitration awards, regulatory sanctions, or criminal charges — information that every investor should review before opening an account.
FINRA operates one of the largest securities dispute resolution forums in the world. When investors have disputes with brokerage firms, they typically resolve them through FINRA arbitration rather than litigation. This arbitration process is generally faster and less expensive than going to court, and most brokerage account agreements require customers to use it.
On the market integrity side, FINRA monitors trading activity across U.S. equity and fixed-income markets for signs of manipulation, fraud, and rule violations. It cross-references trading data with news events, corporate disclosures, and other information to identify suspicious patterns. Violations can result in fines, suspensions, or permanent bars from the securities industry. For everyday investors, understanding FINRA's role is important because the broker-dealer through which you invest must comply with FINRA rules, including suitability standards that require brokers to recommend investments appropriate for your financial situation.