If the SEC regulates the overall structure of the US securities markets, another institution focuses on a more specific layer of the system.

That institution is the Financial Industry Regulatory Authority, or FINRA.

FINRA supervises broker-dealer firms and the individuals who work within them. In simple terms, it regulates the intermediaries that actually handle investor trades.

FINRA is what is known as a self-regulatory organisation. It operates independently, but under the oversight of the SEC. This structure allows the industry to be supervised closely while still remaining accountable to the federal regulator.

As of the end of 2024, FINRA oversaw over 3,200 broker-dealer firms and more than 700,000 registered representatives operating in the United States.

Its responsibilities include several important areas.

First, broker licensing.

Anyone who wants to work as a registered representative at a brokerage firm in the US must pass licensing examinations and be registered through FINRA. This ensures that the individuals handling investor accounts meet minimum professional standards.

Second, supervising brokerage firms.

FINRA monitors how broker-dealers operate, including their trading practices, client communications, and internal compliance systems. Firms must follow strict rules on how they handle client assets, report transactions, and maintain records.

Third, investigating misconduct.

If a brokerage firm or individual broker violates industry rules — through misrepresentation, unsuitable recommendations, or other forms of misconduct — FINRA has the authority to investigate and impose disciplinary actions.

One of the most useful tools FINRA provides for investors is a public database called BrokerCheck.

Through BrokerCheck, investors can search for any registered brokerage firm or individual broker and view:

• registration status
•  licensing history
•  past regulatory actions or disciplinary events

For anyone opening an account with a US brokerage firm, spending a few minutes checking the firm’s record on BrokerCheck can be a simple but valuable step.

It is also helpful to remember how the regulatory responsibilities are divided.

The SEC oversees the markets and securities themselves. FINRA oversees the brokers and brokerage firms operating within those markets.

Together, these institutions form the core of the US regulatory framework that governs how securities trading takes place.