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Question

Difficulty: EasySelf-Regulatory Organizations (SROs) and FINRA

Which of the following sanctioning powers falls directly within the disciplinary authority of FINRA when enforcing compliance among member firms and associated persons?

  1. Barring an associated person from participating in the securities industry for rule violationsAnswer
  2. B
    Filing criminal charges and seeking prison sentences for individuals engaging in securities fraud
  3. C
    Regulating reserve requirements and interest rates on commercial bank deposit accounts
  4. D
    Acting as a principal market-making dealer in municipal and corporate debt securities

Answer

Barring an associated person from participating in the securities industry for rule violations
As a self-regulatory organization under SEC oversight, FINRA has the explicit authority to enforce rule compliance through administrative sanctions. These powers include issuing censures, levying fines, suspending registrations, and barring associated persons from associating with FINRA member firms.

Step-by-Step Solution

1
Identify the scope of FINRA's authority as a self-regulatory organization (SRO).
FINRA oversees membership compliance for broker-dealers and associated persons and possesses civil disciplinary powers.
SRO authority allows FINRA to impose administrative sanctions—such as fines, censures, suspensions, and industry bars—on registered entities and individuals.

Key Concept

FINRA Disciplinary Authority and SRO Powers
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Topics

Self-Regulatory Organizations (SROs) and FINRA

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