An investigation reveals that an associated person of a FINRA member firm engaged in willful wire fraud and misappropriation of customer funds. Although FINRA initiates formal disciplinary proceedings, the victimized customers request that FINRA file criminal charges and seek imprisonment for the perpetrator. Which of the following statements accurately describes FINRA's legal authority in this situation?
- FINRA can impose industry sanctions, such as fines and permanent bars from association, but must refer criminal prosecution matters to appropriate government authorities.Cevap
- BFINRA possesses statutory federal police powers allowing its enforcement division to directly indict individuals and prosecute criminal charges in federal court.
- CFINRA's jurisdiction extends to commercial banking operations, enabling it to directly freeze all commercial bank deposits and issue criminal arrest warrants.
- DFINRA acts as a principal dealer in regulatory disputes, absorbing customer losses from its own trading inventory to resolve fraudulent conduct.
Cevap
FINRA can impose administrative sanctions, such as fines and permanent bars from association, but must refer criminal prosecution matters to appropriate government authorities.
As a Self-Regulatory Organization (SRO), FINRA has broad disciplinary authority over member broker-dealers and associated persons, allowing it to issue censures, fines, suspensions, and permanent industry bars. However, because FINRA is not a government agency, it does not possess criminal enforcement powers and cannot prosecute criminal cases or issue prison sentences; criminal violations must be referred to government authorities like the U.S. Department of Justice.
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Self-Regulatory Organization (SRO) Authority and Limitations
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