FINRA – Nongovernmental Regulation of the Securities Industry

Darin Pastor pic
Darin Pastor
Image: capstonefinancialgroupinc.com

Darin Pastor, the chairman and chief executive officer of the Capstone Financial Group, Inc., in New York, entered the financial services industry in 1996 and served in positions of increasing responsibility with such firms as Prudential Insurance and JP Morgan Chase. Darin Pastor earned his MBA from the University of Liverpool and holds several professional securities licenses, including FINRA Series 6, 7, 24, 51, 63, and 66.

The Financial Industry Regulatory Authority, or FINRA, was formed in 2007 by the consolidation of the National Association of Securities Dealers, or NASD, and the member regulation operations of the New York Stock Exchange, including its enforcement and arbitration components. Although the Securities and Exchange Commission (SEC) approved the creation of FINRA, it is not part of the SEC or any other governmental entity. It’s a not-for-profit, nongovernmental regulatory body with responsibility for securities brokers and dealers doing business in the United States.

FINRA’s overall charge is to maintain the integrity of the financial markets and protect investors. It does so in many ways, including registering those who participate in the securities industry and educating them, examining securities firms, writing and enforcing rules governing the conduct of those participants and firms, providing education for the investing public, and providing dispute-resolution forums. It supervises nearly 4,000 securities firms and more than 640,000 brokers and processes an average of 40 billion transactions daily. It referred more than 700 fraud cases to the courts for prosecution in 2014, and it levied more than $165 million in fines and restitution.

Among FINRA’s many responsibilities, perhaps the most important are guaranteeing that any advertising related to securities products is truthful and not misleading and that any person who sells a securities product has been thoroughly qualified, tested, and licensed.

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