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Difficulty: EasySelf-Regulatory Organizations (SROs) and FINRA

Which of the following entities is a non-governmental self-regulatory organization (SRO) responsible for overseeing broker-dealers and their registered representatives in the United States securities industry?

  1. Financial Industry Regulatory Authority (FINRA)Answer
  2. B
    Securities and Exchange Commission (SEC)
  3. C
    Federal Reserve Board (FRB)
  4. D
    Securities Investor Protection Corporation (SIPC)

Answer

Financial Industry Regulatory Authority (FINRA)
The Financial Industry Regulatory Authority (FINRA) is the primary self-regulatory organization (SRO) empowered to write and enforce rules governing broker-dealers and registered representatives in the United States.

Step-by-Step Solution

1
Distinguish between government regulatory agencies and self-regulatory organizations (SROs).
Government agencies (like the SEC) hold statutory oversight powers, whereas SROs are member-funded regulatory entities.
SROs establish and enforce rules for member firms under the ultimate jurisdiction of the SEC.
2
Identify the principal SRO supervising broker-dealers and registered representatives.
The Financial Industry Regulatory Authority (FINRA) directly regulates broker-dealer operations, licensing, qualifications, and conduct.
FINRA serves as the primary securities industry SRO under federal securities laws.

Key Concept

Self-Regulatory Organizations (SROs) and FINRA Regulatory Scope
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Self-Regulatory Organizations (SROs) and FINRA

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