A customer maintains both a securities brokerage account at a FINRA-member broker-dealer and a personal checking account at an affiliated commercial bank. If a dispute arises exclusively concerning the commercial bank's lending rates and checking account fees, which of the following statements best describes FINRA's regulatory authority?
- FINRA lacks regulatory jurisdiction over commercial bank deposit and lending activities, as its scope is limited to member broker-dealers and registered associated persons.Answer
- BFINRA has authority to examine and sanction commercial bank operations whenever the bank shares corporate ownership with a member broker-dealer.
- CFINRA can initiate criminal prosecution against bank officers if checking account fee disclosures violate federal banking laws.
- DFINRA retains jurisdiction over the commercial bank provided the bank acts as a principal dealer charging markups on bank products.
Answer
FINRA lacks regulatory authority over commercial banking activities such as deposit accounts and consumer lending, because its jurisdiction as an SRO is strictly confined to securities broker-dealers and their associated persons.
FINRA's jurisdiction as a self-regulatory organization (SRO) is restricted to securities firms (member broker-dealers) and their associated persons. Commercial bank deposit products, loans, and checking account fees fall under federal and state banking regulators (such as the OCC, Federal Reserve, or FDIC), not FINRA.
Step-by-Step Solution
Key Concept
FINRA Jurisdiction and Regulatory Scope
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