Examkin

Question

Difficulty: MediumSelf-Regulatory Organizations (SROs) and FINRA

An associated person of a FINRA member broker-dealer is investigated for severe violations of FINRA conduct rules concerning the misuse of customer funds. Following a formal disciplinary proceeding, FINRA determines that sanctions are necessary. Which of the following penalties falls within FINRA's authorized enforcement powers?

  1. Barring the individual from associating with any FINRA member firm in any capacityAnswer
  2. B
    Sentencing the individual to a term of imprisonment for securities law violations
  3. C
    Revoking the commercial banking licenses of the representative's financial institution
  4. D
    Trading as a principal from inventory to offset customer losses directly

Answer

Barring the individual from associating with any FINRA member firm in any capacity is within FINRA's disciplinary authority.
As a self-regulatory organization (SRO), FINRA has administrative jurisdiction over member firms and associated persons. Its statutory authority allows it to levy monetary fines, issue censures, suspend registrations, and permanently bar associated persons from associating with any FINRA member firm.

Step-by-Step Solution

1
Identify FINRA's regulatory status and authority scope
FINRA is a registered Self-Regulatory Organization (SRO) overseen by the SEC.
SRO authority derives from membership rules and statutory delegation under federal securities laws.
2
Distinguish SRO disciplinary sanctions from criminal or banking regulatory powers
FINRA can impose administrative sanctions such as fines, censures, suspensions, and bars, but cannot issue criminal sentences or regulate commercial banking charters.
Criminal prosecution belongs exclusively to government agencies and courts, while banking oversight belongs to banking regulators.

Key Concept

FINRA Disciplinary Authority and SRO Scope
Rate this question

Topics

Self-Regulatory Organizations (SROs) and FINRA

More questions from this topic