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Difficulty: EasySecurities and Exchange Commission (SEC) Role and Jurisdiction

Self-Regulatory Organizations (SROs), such as FINRA, must file their proposed rule changes with the Securities and Exchange Commission (SEC) for review and approval prior to implementation.

Answer: Answer

Answer

The statement is true because the Securities and Exchange Commission (SEC) maintains ultimate statutory oversight over Self-Regulatory Organizations (SROs) and must review and approve proposed SRO rule changes.
The Securities and Exchange Commission (SEC) retains final authority over the securities industry regulatory structure. Although SROs like FINRA draft rules governing broker-dealer conduct, federal law mandates that proposed SRO rule changes be submitted to the SEC for public notice, review, and approval before enforcement.

Step-by-Step Solution

1
Identify the regulatory hierarchy between the SEC and Self-Regulatory Organizations (SROs).
The SEC is the apex federal regulator responsible for supervising SROs such as FINRA and national securities exchanges.
Federal law grants the SEC primary jurisdiction over the securities market and its regulatory bodies.
2
Evaluate the statutory requirement for SRO rule changes under the Securities Exchange Act of 1934.
Proposed rule changes by SROs must be filed with the SEC for public comment and federal approval before taking effect.
This process ensures that SRO rules align with federal securities laws and protect investors.

Key Concept

SEC Supervisory Oversight and SRO Rule Approval Jurisdiction
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Securities and Exchange Commission (SEC) Role and Jurisdiction

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