3

FINRA is a private entity per https://en.wikipedia.org/wiki/Financial_Industry_Regulatory_Authority and per http://www.finra.org/industry/disciplinary-actions and also otherwise its revenue comes from per wikipedia "FINRA is funded primarily by assessments of member firms' registered representatives and applicants, annual fees paid by members, and by fines that it levies."

So my question is how come a private entity levies fines, I thought government can levies fines and not private entity on other private entity.

I think finra should be a tag, but given it takes 1500 points to create tag, I could not.

5

Any private organization can set up rules and regulations that can lead to the authority to fine a member. If somebody doesn't want to abide by those rules they can leave or not join.

They are what is known as a Self-regulatory organization here is a quote from Wikipedia:

A self-regulatory organization (SRO) is an organization that exercises some degree of regulatory authority over an industry or profession. The regulatory authority could exist in place of government regulation, or applied in addition to government regulation. The ability of an SRO to exercise regulatory authority does not necessarily derive from a grant of authority from the government.

FINRA is not the only organization that does this, other examples include:

  • Entertainment Software Rating Board
  • American Medical Association
  • National Association of Realtors
  • American Bar Association
  • professional sports leagues.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.