Putting Investors First
Your Guide to FINRA and Its Investor Services
Today's investors look to the securities industry for advice, services, and products to help them meet
retirement, college, and other critical savings objectives. With the investment landscape changing almost
daily, investors want to be certain they will receive fair treatment through well-regulated securities
markets and that they have somewhere to turn if things go wrong. FINRA is dedicated to creating a safe
environment for the investor to transact business in today's complex world of investing. We do this
through a combination of our regulatory and compliance programs for brokerage firms and by providing
investors with objective educational information that they can use to protect themselves.
FINRA
As the world's leading private-sector provider of financial regulatory services, FINRA has helped bring
integrity to the markets" and confidence to investors" for almost 70 years. Under federal law, every
securities firm doing business with the U.S. public is required to register with this private, not-for-profit
organization. Roughly 5,100 brokerage firms, nearly 171,000 branch offices, and more than 662,000
registered securities representatives come under our jurisdiction.
Investor Protection
Today, more than 90 million Americans and countless others around the world invest in the U.S. equities
markets' whether directly or through retirement plans, mutual funds, and other vehicles. FINRA's role is to
foster the industry integrity and investor confidence that are at the root of the markets' success. In
carrying out this mission, FINRA relies on highly skilled professionals with expertise in market operations,
securities law, finance and accounting, investment products, and technology.
Industry Oversight and Regulation
FINRA's main responsibility is to develop rules that govern the conduct of the securities industry, examine
securities firms for compliance, and discipline any who fail to comply. This layer of non-governmental
regulation combines our tough, resource-intensive, front-line rulemaking and enforcement with close
oversight by the Securities and Exchange Commission (SEC). And industry funding makes it a bargain for
taxpayers.
Just a sampling of FINRA's initiatives conveys the breadth of our regulatory responsibilities. In recent
years, we have written and implemented new rules to govern telemarketing activities, led an industry task
force to find solutions to problems in delivering breakpoint discounts to investors purchasing mutual fund
shares with front-end loads, and dramatically increased transparency in the corporate debt market by
providing real-time transaction price data for more than 30,000 publicly traded corporate bonds.
In a typical year, FINRA initiates thousands of examinations for cause—many triggered by customer
complaints—and conducts around 2,500 routine audits of the firms it regulates.
Enforcement
Enforcement is a fundamental part of FINRA's mission. It not only encourages compliance and punishes
wrongdoing, but helps the vast majority of securities firms who obey the rules and have a strong interest
in maintaining the industry's reputation. Recently, vigorous FINRA enforcement in the mutual fund arena
has improved the way mutual funds are sold to investors. And FINRA continually fines, suspends, and
bars firms and individuals who break the rules, building trust in securities markets and investing overall.
Monitoring the Markets
FINRA monitors all trading on NASDAQ and selected global markets. We strive to ensure compliance
with the rules governing best execution, insider trading, money laundering, and other trading obligations.
Our market surveillance requires the most sophisticated technology and automated monitoring systems
which FINRA uses to identify sequences of quotes and trades that may signal a potential violation, and to
reconstruct market transactions using data gathered in real time throughout the trading day. We spend
well over $100 million per year on technology.
Certification, Education, and Training of Securities Industry Personnel
In a complex, fast-changing industry, nothing is more important than maintaining the qualifications, high
standards, and competence of the market professionals to whom investors entrust their hard-earned
money.
Every one of the more than 660,000 investment professionals engaged in the U.S. securities business
must register with FINRA, meet qualification requirements, and pass a FINRA-administered examination.
FINRA-administered exams cover a broad range of subjects related to the markets, the securities
industry, and how it is regulated.
Securities industry professionals also must satisfy continuing education requirements including
coursework on market rules and regulations, as well as investment products and services. Each year,
FINRA administers programs that provide more than 500,000 person-hours of continuing education.
As a complement to its regulatory functions, FINRA offers a wide variety of educational programs
designed to encourage compliance with NASD rules and federal securities laws, and also to support a
thorough understanding of products and services that will best serve investors. From practical e-learning
courses, to online webcasts and podcasts, to a prestigious certificate program at the Wharton School,
FINRA provides a variety of educational programs to help industry professionals enhance their skills, stay
current on a wide range of issues, and foster a culture of compliance. At FINRA, we believe that
education is the foundation of market integrity, which is why professionals in our industry must never stop
learning.
Advertising and Underwriting Reviews
FINRA also works to ensure that securities advertising is accurate and free of misleading claims. FINRA
reviews ads for offerings such as mutual funds and variable annuities. The number of these reviews has
grown to almost 93,000 per year—covering the full range of media from TV, radio and the Internet, to
print ads and direct marketing materials.
FINRA also reviews brokerage firms' underwriting terms and arrangements in connection with all public
offerings for the firms it regulates. FINRA ensures that the underwriting compensation paid to the firm is
fair, and that the terms and arrangements are equitable. Limiting the compensation paid to the
underwriters allows more funds from the offering available to the issuing company to carry out its
business plan.
Investor Education
Today's investor lives on Main Street, not Wall Street. With more than half of U.S. households now
participating in the securities markets, demand for investment information has grown dramatically. And
with results of a national survey showing that an overwhelming 97% of investors realize they need to be
better informed about investing, we have responded with an expanded array of resources.
Education and Outreach
Our award-winning Web site houses a tremendous amount of information, as well as tools and resources
to protect investors and help them make informed investment decisions.
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Investor Alerts provide timely information on steering clear of investment scams and problems
instead of just dealing with their aftermath.
The Understanding Professional Designations database helps investors navigate the maze of
professional credentials used by financial industry participants.
Smart Investing is a series that takes a detailed look at major investment topics. Current
installments include Smart Saving for College, Smart 401(k) Investing, and Smart Bond Investing.
Interactive tools such as the Mutual Fund Expense Analyzer allow investors to compare among
competing investment alternatives.
Spanish-language resources take investor education beyond the English-only audience.
Some of FINRA's Web materials are also available in print. In addition, FINRA is active in shaping and
prioritizing the nation's financial education agenda, partnering and participating with other organizations
domestically and internationally to bring investor education and outreach best practices to the widest
possible constituency.
FINRA Investor Education Foundation
The FINRA Investor Education Foundation's mission is to provide investors with high-quality, easily
accessible information and tools to better understand the markets and basic principles of saving and
investing. The Foundation was established in response to both the current environment in the markets
and a survey that showed that investors have a number of fundamental questions and misunderstandings
about important investment issues. The Foundation awards grants to fund educational programs and
research aimed at segments of the investing public who could benefit from additional resources. In
addition, the Foundation has launched a financial educational program to improve the saving and
investing knowledge of military servicemembers and their families. For more information about the
FINRA Investor Education Foundation Foundation, visit http://www.finrafoundation.org/. For more
information about the Foundation's military financial education program, visit www.SaveAndInvest.org.
FINRA BondInfo
FINRA's BondInfo Web site provides investors with free real-time trade data for virtually all corporate
bonds. Investors can search for bonds by name, CUSIP number, symbol, maturity, rating, industry group,
or coupon rate. BondInfo also allows investors to set up and track a bond portfolio. FINRA's Trade
Reporting and Compliance Engine, known as TRACE, is the source of the real-time corporate bond data
used by FINRA BondInfo and a growing number of financial information outlets.
FINRA BrokerCheck
FINRA BrokerCheck gives investors convenient access to information about securities firms and their
brokers. More than 5 million BrokerCheck search matches and reports were logged in 2006. FINRA
encourages investors to use this valuable resource to learn about the professional background, business
practices, and conduct of the brokerage firms and brokers. Investors can request a report of all
disclosable information through our Web site or by calling toll free (800) 289-9999.
Investor Complaint Program
Despite the efforts of FINRA and other regulators to maintain the integrity of the market and to protect the
investor, problems do occur. What recourse do investors have if they feel they have been treated unfairly
or misled? Initially, the investor should call the securities firm's compliance officer to discuss any unfair or
improper conduct by a broker. Investors can also contact FINRA to lodge complaints.
Investigating complaints from investors is a significant function of FINRA. With the help of investors,
FINRA has successfully disciplined firms and brokers that violate NASD rules or the law. You can submit
a complaint by completing an online form at our Web site: www.nasd.com/complaint. You may also send
a detailed letter to the FINRA Investor Complaint Center:
FINRA Investor Complaint Center
9509 Key West Avenue
Rockville, MD 20850-3329
Fax: (866) 397-3290
If you are seeking to recover money or securities, you may want to consult with your own attorney and
consider filing an arbitration, mediation, or private civil action.
Arbitration and Mediation
Although the vast majority of investors will never need to resolve an investment-related problem, all
investors need to know that there is a fair and efficient process for handling any dispute that might arise
with their broker or brokerage firm. FINRA operates the securities industry's largest dispute resolution
forum with hearing locations in all 50 states, Puerto Rico, and London, England. The two pillars of this
forum are mediation and arbitration, each providing a professional, fair and neutral process for resolving
disputes.
Each year, about 80 percent of mediated cases result in a settlement. Parties settle more than 60 percent
of all cases either directly or through mediation, and fewer than 25 percent of the cases are decided by
arbitrators. In the last seven, arbitrators have awarded damages in about half of the cases that investors
have brought.
To receive more specific information about FINRA arbitration or mediation facilities or the forms needed
to begin the process, visit our Web site or send a letter to:
FINRA Dispute Resolution
One Liberty Plaza
165 Broadway, 27th Floor
New York, NY 10006