During an investigation into potential conversion of customer funds by a registered representative, FINRA enforcement staff request personal account statements directly from an unaffiliated commercial bank where the representative maintains an account. The bank refuses to provide the documents voluntarily. Which of the following statements accurately describes FINRA's regulatory authority in this situation?
- FINRA lacks statutory subpoena authority over non-member third parties like commercial banks and must rely on federal regulators or law enforcement to compel production.Cevap
- BFINRA possesses broad statutory subpoena power over all domestic financial institutions under authority delegated directly by the Securities Exchange Act of 1934.
- CFINRA automatically acquires regulatory jurisdiction over commercial bank banking operations whenever a registered representative opens an account at that institution.
- DFINRA can issue binding document production orders to the bank only if the bank acts as a principal dealer in corporate debt rather than an agent.
Cevap
FINRA lacks statutory subpoena authority over non-member third parties like commercial banks and must rely on federal regulators or law enforcement to compel production.
As a self-regulatory organization (SRO), FINRA derives its authority contractually over member firms and associated persons. FINRA does not possess statutory subpoena power over non-member third parties, such as unaffiliated commercial banks. When non-member entities refuse to cooperate voluntarily, FINRA must coordinate with federal regulators (like the SEC) or law enforcement agencies that possess statutory subpoena authority.
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SRO Jurisdiction Limits and Subpoena Authority
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