SEC and FINRA Regulations

United States Securities and Exchange Commission -SEC

The SEC is the agency responsible for administering federal securities laws in the US. The primary mission of the U.S. Securities and Exchange Commission (SEC) is to protect investors and maintain the integrity of the securities markets. The SEC also oversees other key participants in the securities world, including stock exchanges, broker-dealers, investment advisors, mutual funds, and public utility holding companies.

Crucial to the SEC's effectiveness is its enforcement authority. Each year the SEC brings between 400-500 civil enforcement actions against individuals and companies that break the securities laws. Typical infractions include insider trading, accounting fraud, and providing false or misleading information about securities and the companies that issue them.

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Financial Industry Regulatory Authority (FINRA)

FINRA

The Financial Industry Regulatory Authority (FINRA) is now operating as the securities industry's new self-regulatory body. The consolidation of NASD and NYSE Member Regulation has been approved by the SEC and is effective immediately. The New Website www.finra.org. FINRA is now the largest, non-governmental regulatory organization for securities brokers and dealers doing business in the United States--overseeing more than 5,000 firms employing over 666,000 registered representatives.

FINRA was created through the consolidation of NASD and the member regulation, enforcement and arbitration operations of the New York Stock Exchange. The consolidation, which was announced on Nov. 28, 2006 and approved by the Securities and Exchange Commission on July 26, 2007, became effective today, July 30, 2007.

FINRA will conduct the regulatory oversight of more than 5,000 securities firms and 666,000 registered representatives. It will be responsible for rule writing, firm examination, enforcement and arbitration and mediation functions, along with all functions that were previously overseen solely by NASD, including market regulation under contract for NASDAQ, the American Stock Exchange, the International Securities Exchange and the Chicago Climate Exchange.

Mary L. Schapiro, Chief Executive Officer of FINRA will oversee FINRA. FINRA will be an investor-focused and more streamlined regulator that is better suited to the complexity and competitiveness of today's global capital markets. By eliminating overlapping regulation and establishing a uniform set of rules placing oversight responsibility in a single organization, FINRA will enhance investor protection while increasing the competitiveness of our financial markets.

FINRA has approximately 3,000 employees and will operate from Washington, DC, New York and 15 District Offices around the country.

The NASD Investor Education Foundation Renamed FINRA

The NASD Investor Education Foundation has been renamed FINRA Investor Education Foundation. It will continue to fund innovative research and educational projects that give investors the tools they need to better understand the markets and the basic principles of saving and investing. As of June 2007, the FINRA Foundation had approved $10.4 million in grants and an additional $10.2 million in direct investor education programming. For details about grant programs and other FINRA Foundation initiatives, please go to www.finrafoundation.org

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