If you have been a longtime reader of this column, you've seen FINRA mentioned many, many times as a resource for investors. While FINRA (the Financial Industry Regulatory Authority) may look like it's part of the government, it is not. FINRA is a "self-regulatory organization for member broker-dealers that is responsible under federal law for supervising our member firms" (finra.org/about).
As a self-regulatory organization (SRO), FINRA performs its work under the supervision of a government regulator, the U.S. Securities and Exchange Commission (SEC).
Member firms are registered with the SEC as broker-dealers. Quoting from FINRA's website: "FINRA members must meet extensive conduct, operational and financial requirements. FINRA, under the close supervision of the SEC, oversees its member firms' compliance with these requirements. In addition, individuals who are associated with member firms and who are engaged in the investment banking or securities business must be qualified and registered with FINRA. Other types of financial firms and individuals are not subject to FINRA oversight" (tinyurl.com/mtz3z6f2).
All of this translates into significant benefits for investors. FINRA member representatives have to be tested and licensed; their licenses can be revoked in instances of wrongdoing; and FINRA provides a dispute resolution mechanism to customers who have disputes with representatives of member firms (tinyurl.com/44v6errh).
FINRA handles BrokerCheck (brokercheck.finra.org/). This tool allows you to "research the background and experience of financial advisers and firms." Among the details available are an adviser's years of experience and firms worked for, and an adviser's licenses and registrations. Also included is the disclosure history of an adviser or firm, namely "customer complaints or arbitrations, regulatory actions, employment terminations, bankruptcy filings and certain civil or criminal proceedings." This information can be crucial when an investor is evaluating advisers or firms.
FINRA's Department of Enforcement (tinyurl.com/23zb3y59) works to bring "meaningful enforcement actions to correct wrongdoing and deter future misconduct" and seeks to root out "the bad actors that pose the greatest risk of harm to investors and the markets."
FINRA supervises qualification exams for those seeking to become securities professionals, including the Securities Industry Essentials (SIE) and Series 7 (General Securities Representative) exams (tinyurl.com/ytkmurjt). It also offers a continuing education program for those in the securities industry that includes FLEX Education, which has interactive e-learning courses. FINRA's Financial Industry Networking Directory (FIND) aims to connect those enrolled to take the SIE exam "with firms that are recruiting for employment and internship opportunities" (tinyurl.com/bdhhmtmr).
FINRA Data (tinyurl.com/yrf6mtw5) furnishes a large amount of information, from fixed-income data (bond details, market statistics and trade activity) to statistics on firms, representatives and investors. FINRA also has its Trade Reporting and Compliance Engine (TRACE), which "facilitates the mandatory reporting of over-the-counter transactions in eligible fixed income securities" (tinyurl.com/4htuf8zd).
Seniors (and youngsters) who have "concerns about issues with brokerage accounts and investments" can go to FINRA's Securities Helpline for Seniors (tinyurl.com/3dc87a3s). Callers can get assistance on reviewing their portfolio or account statements and ask questions about how their brokerage account has been handled.
Those who are relatively new to investing should check out "Get Your Head in the Trade," which offers interactive tools to help evaluate important considerations like risk tolerance and financial goals (tinyurl.com/2xt53e3j).
Among FINRA's reports and studies (tinyurl.com/2e6kvv8j) is its annual Industry Snapshot, which provides an important overview "ranging from the number of FINRA-registered individuals to the overall revenues of firms, and from trading activity to how firms market their products and services."
Of course, FINRA also is heavily involved in investor education, beginning with its For Investors website section (tinyurl.com/dc8h42n), which includes tools and resources, among them the ability to check out the letters after an investment professional's name (tinyurl.com/42856wrj) and a Scam Meter, which can help you better judge a deal before taking action (tinyurl.com/yrjwhvuw).
As FINRA states, "We believe empowered investors make smarter decisions" (tinyurl.com/z8v74mwt). And since I am a proponent of financial literacy for all, FINRA continues to be my go-to resource for a myriad of investor issues and serves as a familiar reference point in my columns.
DISTRIBUTED BY ANDREWS MCMEEL SYNDICATION