The Private Watchdog: Inside FINRA’s Power, BrokerCheck, and the Fight Over Arbitration
Episode 1253
Who is actually watching your stockbroker? In this episode, we deep dive into the Financial Industry Regulatory Authority (FINRA), the private American corporation responsible for regulating member brokerage firms and exchange markets. We explore how this self-regulatory organization, which oversees nearly 3,400 firms and over 600,000 registered representatives, operates under the oversight of the SEC to protect investors.
In this episode, we cover:
- Origins and Authority: How FINRA was formed by the 2007 consolidation of the NASD and the enforcement arm of the New York Stock Exchange. We also discuss the June 2025 Supreme Court decision that upheld FINRA’s constitutionality against challenges to its regulatory power.
- Checking Your Broker: We explain the "BrokerCheck" system, a public database where you can review a financial advisor’s employment history, certifications, and disciplinary records. We examine the controversial "expungement" process, where brokers can petition to remove misconduct records, and the stricter rules FINRA implemented in 2023 to address criticisms from politicians like Elizabeth Warren.
- Dispute Resolution: FINRA operates the largest arbitration forum in the U.S., handling virtually all disputes between investors and brokerage firms due to mandatory arbitration clauses. We break down how these arbitration panels are selected and the debate over whether the process favors the industry over the consumer.
- Enforcement and Fines: How FINRA is funded by member fees and fines, including the $48.1 million in fines issued in 2022.
Join us as we analyze the machinery behind Wall Street’s self-regulation and what every investor needs to know about the organization policing their financial future.
Published on 1 day, 12 hours ago