What Is FINRA? - KingsCrowd

February 21, 2020

What Is FINRA?

 

When considering the various equity crowdfunding platforms and the deals they offer, you’ve probably seen something about FINRA. Individuals new to the world of investing, you may wonder what it is and what they do. We’re here to help!

 

What Is FINRA?

The Financial Industry Regulatory Authority (FINRA) is an independent, self-regulated, nongovernmental organization that writes and enforces rules governing registered brokers and broker-dealer firms in the United States. FINRA protects investors by ensuring the broker-dealer industry operates fairly and honestly. 

FINRA regulates the trading of equities, corporate bonds, securities futures, and options. With the exception of firms regulated by a different self-regulatory organization, to do business, all firms require a membership. In addition to overseeing securities firms and brokers, regulating authority administers qualifying exams. Securities professionals must pass in order to sell securities or supervise others who do. For example, this organizatinon also administers the Series 7 and Series 3.

FINRA also has the power to take disciplinary actions against registered individuals or firms. Violation results in fining or banning brokers and brokerage firms. 

It’s important to note that FINRA differs from the SEC in that the SEC is not only oversees FINRA, but is responsible for ensuring fairness for the individual investor amongst other things like enforcing regulation and are responsible for overseeing nearly all U.S. stockbrokers and brokerage firms.

 

The KingsCrowd Advantage

As companies continue to raise online through over 50 platforms like Republic, Wefunder, and SeedInvest, FINRA oversees these brokers to ensure that investors are protected from and receive complete disclosure about the investment product they will potentially purchase. FINRA does so by employing over 3,000 people and using innovative AI and machine learning technologies to watch the market. As an independent third-party vetting deals from all platforms, KingsCrowd is here to provide unbiased, institutional grade research and analytics for every company across all platforms. For more information regarding the differing crowdfunding platforms, check out our related article: “How to Invest in Startups and Where to Find Them.” Whether you’re an accredited investor or not, KingsCrowd covers deal flow for all offering types. Signup for KingsCrowd here to access the best analysis and research on the online private markets. 


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About: Francis Vu

An investment professional with a background in private equity and venture capital having spent time conducting investments at VU Venture Partners and Pacific Oak LLC with a finance and management degree from Tulane University.

View Francis Vu's articles

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