The complete compliance reference for FINRA member broker-dealers — registration requirements, key rules, Reg BI obligations, supervision requirements, exam schedules, and enforcement statistics.
✓ FINRA Official SourceReg BI effective June 2020Updated March 2026
What Is FINRA?
✓ Verified DataVerified: FINRA.org official documentation
The Financial Industry Regulatory Authority (FINRA) is a not-for-profit, government-authorized self-regulatory organization (SRO) that oversees the US broker-dealer industry. FINRA was created in July 2007 through the consolidation of NASD (National Association of Securities Dealers) and the member regulation, enforcement, and arbitration functions of the New York Stock Exchange (NYSE Regulation, Inc.). (FINRA About Page)
FINRA operates under the oversight of the Securities and Exchange Commission (SEC). While the SEC is the primary regulator, FINRA handles day-to-day registration, examination, and enforcement for broker-dealers. FINRA does not regulate investment advisers — those are regulated by the SEC (federally) or state securities regulators. (SEC.gov)
3,400+
Member Firms
630K+
Registered Reps
2007
Founded (NASD + NYSE)
$57M+
Annual Fines (2023)
~800
Annual Enforcement Actions
FINRA Registration Requirements
✓ Verified DataFINRA Registration and Qualification requirements
Firm Registration
Broker-dealers must register with FINRA via the Central Registration Depository (CRD) system and maintain registration by paying annual assessments and meeting continuing requirements. The process involves: (FINRA Registration)
File Form BD (Broker-Dealer) with the SEC and FINRA
Designate a principal (FINOP) and compliance officer
Meet net capital requirements under SEC Rule 15c3-1
Register with applicable state securities regulators
Individual Registration & Licensing Exams
License
Exam
Who Needs It
General Securities Representative
Series 7 (165 Qs, 3h45m)
Broker-dealer reps selling most types of securities
Securities Industry Essentials
SIE (75 Qs, 1h45m)
Co-requisite for all FINRA qualification exams
Investment Banking
Series 79 (75 Qs, 2h30m)
Reps engaged in IB — M&A, private placements, debt/equity offerings
General Securities Principal
Series 24 (150 Qs, 3h45m)
Branch managers, supervisory principals
Municipal Securities
Series 52 / 53
Municipal securities reps and principals
Options Principal
Series 4
Supervisors of options business
Compliance Officer
Series 14 (CCO exam)
Chief Compliance Officers of member firms
Key FINRA Rules
✓ Verified DataFINRA Rulebook, verified from finra.org/rules-guidance
FINRA's comprehensive rulebook is organized into numbered rule series. Below are the most critical rules for broker-dealer compliance. (FINRA Rulebook)as of March 2026
Rule 2010
Standards of Commercial Honor & Principles of Trade
The general ethics rule requiring all FINRA members and associated persons to observe high standards of commercial honor and just and equitable principles of trade in the conduct of their business.
Rule 2111
Suitability
Prior to Reg BI (2020), required recommendations to be suitable for the customer. Still applies to institutional accounts and non-retail customers; for retail customers, Reg BI applies as the higher standard.
Rule 3110
Supervision
Requires firms to establish and maintain a system to supervise the activities of associated persons that is reasonably designed to achieve compliance with applicable rules. Written supervisory procedures (WSPs) are mandatory.
Rule 4210
Margin Requirements
Establishes minimum margin requirements for securities in customer accounts, including initial margin, maintenance margin, and special rules for options, day trading, and concentrated positions.
Rule 4370
Business Continuity Plans
Requires each member to create and maintain a written BCP identifying procedures for an emergency or significant business disruption. Must be reviewed annually and filed with FINRA.
Rule 4511
General Requirements for Books & Records
Requires members to make and preserve books and records as required under FINRA Rules and the federal securities laws, including Exchange Act Rules 17a-3 and 17a-4.
Rule 4512
Customer Account Information
Requires members to maintain essential facts for each customer account, including name, address, tax ID, investment objectives, and financial status. Customer profile must be updated when information changes.
Rule 4530
Reporting Requirements
Requires members to promptly report to FINRA certain events including customer complaints, regulatory actions, criminal charges, and internal disciplinary actions against associated persons.
Reg BI (SEC Rule 17 CFR 240.15l-1) became effective June 30, 2020, replacing the older suitability standard for retail customer recommendations. FINRA serves as a co-enforcement authority with the SEC. (SEC Reg BI Final Rule)
Four Component Obligations
Disclosure Obligation: Provide retail customers with a written Form CRS (Customer Relationship Summary) describing the nature of the relationship, fees, conflicts, and disciplinary history.
Care Obligation: Exercise reasonable diligence, care, and skill when making recommendations. Consider the customer's investment profile and reasonably available alternatives.
Conflict of Interest Obligation: Establish, maintain, and enforce written policies to identify and address conflicts of interest, including eliminating or disclosing financial incentives that create conflicts.
Compliance Obligation: Establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Reg BI.
Reg BI vs. Fiduciary Standard: Reg BI imposes a "best interest" standard, which is higher than suitability but generally considered less stringent than the full fiduciary duty applicable to investment advisers under the Investment Advisers Act. Investment advisers (RIAs) are subject to the stricter fiduciary standard.
Inadequate WSPs; failure to detect rep misconduct; branch oversight gaps
Books & Records
Rule 4511, 4512
Incomplete customer records; failure to preserve communications; SEC 17a-4 violations
Off-Channel Communications
Rule 4511
Use of personal email/WhatsApp/Signal for business (SEC has issued $2.5B+ in fines industrywide)
Best Interest / Suitability
Reg BI, Rule 2111
Unsuitable recommendations; failure to consider alternatives; undisclosed conflicts
Anti-Money Laundering
Rule 3310 (BSA)
Inadequate AML program; failure to file SARs; weak CIP procedures
FINRA Compliance Checklist for Broker-Dealers
~ AI-EstimatedBased on FINRA examination findings and enforcement patterns
This checklist is a summarized reference for broker-dealer compliance teams. Specific requirements vary by business model, product type, and firm size. Always consult your compliance counsel.
Ensure all registered reps hold current, appropriate FINRA licenses (SIE + product-specific exam)
Register all new associated persons within 30 days of hire
File Form BD updates promptly for material changes
Maintain minimum net capital per SEC Rule 15c3-1
File FOCUS reports on required schedule (monthly/quarterly)
Issue Form CRS to all retail customers; file with FINRA
Establish and maintain written supervisory procedures (WSPs) for all business lines
Conduct annual reviews of all branch offices
Implement Reg BI conflict of interest policies; document and disclose all material conflicts
Maintain and test Business Continuity Plan annually; update emergency contacts
Preserve all business communications (email, text, chat) per FINRA Rule 4511 and SEC 17a-4
Implement off-channel communications controls (block personal messaging apps for business)
Conduct FINRA-required Continuing Education: Regulatory Element every 3 years (Series 7 holders)
Maintain BSA/AML program with SAR/CTR filing capability
Screen customers and transactions against OFAC sanctions lists
Report events triggering Form U4/U5 amendments within required timeframes (30 days)
Report required events under FINRA Rule 4530 promptly
Frequently Asked Questions
What is the difference between a broker-dealer and an investment adviser?
A broker-dealer buys and sells securities on behalf of clients or for its own account and earns commissions on transactions. An investment adviser provides advice about securities for compensation and is subject to a fiduciary duty. Broker-dealers are regulated by FINRA; investment advisers are regulated by the SEC (if managing $110M+ in AUM) or state securities regulators. Some firms are dually registered as both.
What is BrokerCheck?
BrokerCheck is a free FINRA public database (brokercheck.finra.org) that allows investors to research the professional background of broker-dealers and their registered reps, including employment history, licensing status, regulatory actions, and customer disputes. All investors should check BrokerCheck before working with a broker or brokerage firm.
What is the FINRA arbitration process?
FINRA operates the largest securities dispute resolution forum in the US. Most brokerage customer agreements include mandatory arbitration clauses requiring disputes to be resolved through FINRA arbitration rather than court. FINRA arbitration panels consist of 1 (small claims) or 3 arbitrators (complex matters). The process typically takes 14–16 months. Awards are final and binding.
Can a broker-dealer be expelled from FINRA?
Yes. FINRA can expel member firms for serious or persistent violations, effectively prohibiting them from operating as a broker-dealer in the US. FINRA also has authority to bar individual associated persons from the securities industry. Expelled firms and barred individuals are listed on BrokerCheck permanently.