What is FINRA?
The Financial Industry Regulatory Authority (FINRA) is a non-governmental organization that regulates member brokerage firms and exchange markets. It operates under SEC oversight but is funded by the industry it regulates.
FINRA's mission is to protect investors by making sure the securities industry operates fairly and honestly. They write and enforce rules, examine firms for compliance, and provide tools like BrokerCheck.
💡 Key Stats
FINRA oversees approximately 3,400 brokerage firms, 150,000 branch offices, and 625,000 registered securities representatives.
How to Use BrokerCheck
BrokerCheck is FINRA's free tool that lets you research the professional background of brokers and brokerage firms. You should ALWAYS use it before working with any investment professional.
🔍 Check Your Broker Now
Free tool to verify any broker's credentials, history, and complaints
Open BrokerCheck →What You Can Search:
- Individual brokers — By name, CRD number, or firm
- Brokerage firms — By name or CRD number
- Investment advisor reps — If also registered as a broker
What to Look for in BrokerCheck
Green Flags (Good Signs)
- Current registrations and licenses
- Long employment history
- Clean disclosure record
- Proper qualifications for services offered
🚩 Red Flags (Investigate Further)
- Customer complaints — Especially multiple or recent ones
- Regulatory actions — Fines, suspensions, or bars
- Terminations — Especially "permitted to resign" or "discharged"
- Bankruptcies — May indicate financial judgment issues
- Criminal disclosures — Any felony charges or convictions
Not all disclosures are disqualifying, but they deserve investigation. Ask your broker to explain any items that concern you.
SIPC Protection
While FINRA regulates brokers, SIPC (Securities Investor Protection Corporation) provides limited protection if a brokerage firm fails.
What SIPC Covers:
- Up to $500,000 in securities per customer
- Up to $250,000 in cash per customer
- Protection if the firm fails financially and assets are missing
What SIPC Does NOT Cover:
- Losses from bad investment decisions
- Declines in market value
- Promises of investment performance
- Commodities or futures contracts
💡 Important Distinction
SIPC protects you if your brokerage firm goes bankrupt and your assets are missing. It does NOT protect you if your investments lose value in the market.
Resolving Disputes
If you have a dispute with your broker that you can't resolve directly, FINRA offers arbitration and mediation services:
FINRA Arbitration
Most brokerage agreements require disputes to be resolved through FINRA arbitration rather than court. This is generally faster and less expensive than litigation.
Before Filing:
- Document everything (statements, communications)
- Try to resolve with the firm's compliance department first
- Consider consulting a securities attorney
- File within the eligibility period (generally 6 years)