FINRA is one of the long arms of the law for the securities industry. A non-governmental regulatory authority, FINRA regulates all securities firms (roughly 4,300) that conduct business in the US. Its activities include writing and enforcing rules; enforcing federal securities laws; licensing and registering brokerages and private equity firms; and providing educational information and arbitration services to investors. The regulator works with the SEC and the Fed and possesses the authority to issue fines and bar violators, among other punitive actions. FINRA was formed in 2007 from the consolidation of the National Association of Securities Dealers and certain regulatory and enforcement elements of the NYSE.
FINRA operates from Washington, DC and New York, with 20 regional offices around the US. It also has more than 160,000 branch offices and some 635,000 registered securities representatives.
FINRA obviously benefits when lawmakers and regulators crack down on fraud and the breaking of securities laws that led up to the Great Recession. As such, the bulk of its revenues (about 85%) come from the collection of regulatory, user, and contract service fees.
Total revenues for the organization increased by almost 4% from 2010 to 2011. The growth was attributed to a rise in the number of fines it collected, along with higher contract services fees affiliated with market regulation services.
FINRA suffered a net loss of $84 million for 2011, mostly as a result of non-recurring costs related to the development of new data center facilities in New York and Maryland. The net loss was also due to increased integration expenses used to extend FINRA's cross market surveillance capabilities. – less
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