FINRA

What is FINRA?

The Financial Industry Regulatory Authority regulates all matters related to investment banking (securities underwriting), trading in the over-the-counter (OTC) market, trading in exchange-listed securities, and the conduct of FINRA member firms and associated persons.

Code of Arbitration (COA)

(COA) is a FINRA-run resolution process to settle monetary disputes. The goal is to provide a faster and cheaper resolution versus going through the traditional court system. These decisions are final and bending.

What disciplinary actions can FINRA enforce upon a finding of a violation?

FINRA may suspend, expel, or bar from membership, impose fines, censure, and any other action deemed appropriate.

The main rules and Codes of FINRA:

Conduct rules, code of procedure, uniform practice code, and code of arbitration.

Who investigates suspected violation?

FINRA's Department of Enforcement (DOE).

Do broker-dealer firms apply for membership with FINRA?

Yes, and if granted, they agree to abide by FINRA's rules and regulations. These are often called member firms.

A FINRA firm may only do business with another FINRA firm unless it meets one of the exceptions:

a bank in the underwriting of a municipal issue. A foreign firm that is a member of its nation's FINRA equivalent.

Code of Procedure (COP)

covers the enforcement of FINRA rules and details the punishment of members who violate the Conduct Rules.

Conduct rules

establish the relationship between firms and their customers. These rules cover areas such as fair dealing with customers, compensation-related issues, standards for communications, and various sales practice violations.

Uniform Practice Code (UPC)

rules cover technical aspects of trading and payment for securities transactions. Examples of UPC issues include good delivery of securities, the payment procedures for dividends on common stocks, and interest on bonds.