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How does FINRA protect investors?

On Behalf of | Jul 4, 2024 | FINRA |

You’ve spent years working for your money, and now it’s time for your money to start working for you. While you can put it where you know it will be safe, such as savings accounts or treasury bonds, you most likely won’t see any significant growth.

And while you understand the risks of investing your money for higher returns, there is a big difference between high-risk and inappropriate investments. 

What is FINRA?

The Financial Industry Regulatory Authority (FINRA) was created in 2007 as a self-regulatory organization. Its goals are to oversee and regulate the United States securities industry, protect investors and maintain the integrity of the financial markets.

FINRA ensures that all brokerage firms and their representatives are qualified and properly licensed. They focus on fair practice, transparency and market integrity. FINRA conducts market surveillance to detect and prevent fraudulent activities, market manipulation and insider trading.

When they identify potential violations, they investigate, and if they are confirmed, FINRA has the authority to impose penalties, including fines, suspensions and expulsion from the industry. 

FINRA also maintains a public database called BrokerCheck, where investors can access information about brokerage firms and their representatives. This helps them make informed decisions about whom to trust with their investments.

FINRA also provides plenty of educational resources, such as articles, guides, webinars and interactive tools, to help investors understand financial products, risks and their rights. They also warn the public about new scams, frauds and risky investment practices. By supplying timely information, they help investors recognize and avoid potential threats.

FINRA offers its services to resolve disputes between investors and brokers. An impartial panel reviews the evidence and makes a binding decision. This can be faster and more cost-effective than going to court. Investors can file a complaint if they feel they have been mistreated or experienced misconduct by a broker or brokerage firm.

If you plan to invest your money, FINRA allows you to conduct due diligence on brokers and their firms. While every investment carries risk, they help protect you against inappropriate investments and the unscrupulous people who promote them.


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