FINRA

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FINRA—the Financial Industry Regulatory Authority—is the non-governmental regulator of US brokerage firms, registered brokers, and others who are licensed to sell securities.

The impetus for regulation of securities began after the 1929 stock market crash, when congress passed the Securities Exchange Act of 1934. The Act created the Securities and Exchange Commission, as well as the first self-regulatory organization in the securities industry, the National Association of Securities Dealers (NASD).

The purpose of the NASD was to protect investors by designing rules and regulations for securities markets, and conducting reviews of the activities of individuals and firms who sell securities such as stocks. In 2007, to streamline the oversight function, the NASD merged with its counterpart at the New York Stock Exchange, and the combined entity became FINRA.

The Securities and Exchange Commission is the governmental overseer of FINRA, which has the same responsibilities as its predecessor, including the training, testing, and licensing of financial firms and securities brokers. The main source of funding for FINRA comes from the firms it regulates, as well as fines imposed on those firms for misbehavior.

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