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What do I need to know about FINRA?

On Behalf of | Aug 27, 2021 | FINRA

The Financial Industry Regulatory Authority (FINRA) is a group focused on safeguarding the public from fraud and bad actors within the broker industry. They are not affiliated with the government, but instead operate as an independent organization. FINRA both writes and enforces the rules that help guide practices for brokers and broker-dealer firms throughout the country.

What types of enforcement efforts?

FINRA initiated a reported 808 disciplinary actions in 2020. These actions can result in monetary fines and exclusion from the group. Investors can then look up brokers and broker-dealer firms to see if they are in good standing with FINRA. As a result, exclusion from the group can greatly hurt a broker or broker-dealer firm’s business prospects.

Last year, FINRA issued over $57 million in fines and required alleged bad actors to pay back over $25 million in restitution to negatively impacted investors. FINRA not only has the power to fine, order restitution and kick businesses out of their group, they can also grab the government’s attention and essentially initiate federal investigations. FINRA referred 970 potential cases to the feds. This included the Securities and Exchange Commission (SEC) and other federal organizations. FINRA passed these cases on with accusations that these individuals and businesses were guilty of fraud and insider trading.

How can I resolve a dispute with FINRA?

FINRA often relies on arbitration and mediation for dispute resolution. These processes use a neutral third party to help negotiate a resolution. These options are often timelier and more efficient when compared to traditional litigation, and result in a less expensive resolution process between investors, brokers, and brokerage firms. Those who choose to go through this process do not need to go through it on their own. Legal counsel is available to help better ensure your interests are protected throughout the process.