what is the financial industry regulatory authority finra 
the financial industry regulatory authority finra is an independent nongovernmental organization that writes and enforces the rules governing registered brokers and broker dealer firms in the united states its stated mission is to safeguard the investing public against fraud and bad practices it is considered a self regulatory organization 12finra was created as the result of the consolidation of the national association of securities dealers nasd and the member regulation enforcement and arbitration operations of the new york stock exchange nyse in 2007 the consolidation was meant to do away with overlapping or redundant regulation and reduce the cost and complexity of compliance 3understanding finrathe financial industry regulatory authority finra is the single largest independent regulatory body for securities firms operating in the united states it oversees more than 3 400 brokerage firms 152 000 branch offices and nearly 617 550 registered securities representatives as of 2020 4 finra has 19 offices across the united states and approximately 3 600 employees 5finra regulates the trading of equities corporate bonds securities futures and options it has also been authorized by congress to protect the interests of investors 6in addition to overseeing securities firms and their brokers finra administers the qualifying exams that securities professionals must pass to sell securities or supervise others who do those include for example the series 7 general securities representative qualification examination and the series 3 national commodities futures examination 7in its enforcement capacity finra has the power to take disciplinary actions against registered individuals or firms that violate its rules in 2020 it initiated 808 disciplinary actions levied fines totaling 57 million and ordered restitution of 25 2 million to investors it also expelled two member firms and suspended another two while barring 246 individuals from the securities business and suspending another 375 4also in 2020 it referred 970 fraud and insider trading cases to the securities and exchange commission sec and other government agencies for prosecution 4for investors who are shopping for a broker or want to check up on their current one finra maintains brokercheck a searchable database of brokers investment advisors and financial advisors brokercheck includes certifications education and any enforcement actions 8 it draws from finra s central registration depository crd database which contains the records of individuals and firms in the securities business in the united states 9the financial industry regulatory authority finra has the power to fine or ban brokers and brokerage firms that violate its rules 2benefits of finrafinra s main benefit for investors is protection from potential abuses and unethical conduct within the financial industry finra resources such as the aforementioned brokercheck allow investors to determine if someone claiming to be a broker is actually a member in good standing by banning brokers who violate its rules of conduct finra stops many financial crimes from taking place finra s commitment to and responsibility for these functions was made clear by the combining of the nasd and the nyse s regulation operations into one organization the sec approved the consolidation of these two organizations in july 2007 in announcing its formation finra described a broad mandate that included responsibility for rule writing firm examination enforcement and arbitration and mediation functions along with all functions that were previously overseen solely by nasd including market regulation under contract for nasdaq the american stock exchange the international securities exchange and the chicago climate exchange 10the american stock exchange was acquired by the nyse in 2008 the nyse was acquired five years later by the intercontinental exchange ice the chicago climate exchange a market for trading greenhouse gas emissions allowances was shut down after the purchase by ice of its parent company climate exchange plc in 2010 1112while finra is a private not for profit regulatory organization its creation was approved by the sec in 2007 criticism of finrafinra faces much of the same type of criticism that is often applied to any self regulatory organization critics such as senator warren of massachusetts and senator cotton of arkansas claim that finra does not do enough to protect investors 13in particular an academic study by egan matvos and seru showed that there were issues with repeat offenders it found that financial advisors with past histories of misconduct were several times more likely to commit offenses in the future 14 finra may have been too restrained in exercising its powers the general criticism of self regulatory agencies such as finra is that they do just enough to maintain the public s trust in this view self regulatory agencies have an inherent conflict of interest while members are interested in keeping the public s trust that interest only goes so far members need to weed out the worst offenders but they don t want the spotlight on themselves for example it might be possible to rank all members for integrity yet that would necessarily result in about half of all members being ranked as below average unsurprisingly self regulatory agencies rarely rank their members 