The Financial Industry Regulatory Authority: Not Self-Regulation after All
29 Pages Posted: 26 Jan 2015
Date Written: January 2015
Broker-dealers in the United States are regulated by the Financial Industry Regulatory Authority (FINRA). Although commonly perceived to be a self-regulator, FINRA is not accountable to the industry in the way a self-regulator would be. Nor is it accountable to the public, Congress, the president, or the courts. FINRA’s structure and monopoly status shield it from close oversight. Consequently, an important part of the securities markets is under the control of a regulator with limited accountability. As FINRA seeks to expand its regulatory footprint into areas such as investment adviser regulation, its unique form of regulation warrants reconsideration.
Note: A version of this paper is forthcoming in P. Iglesias-Rodríguez, ed., Building Responsive and Responsible Financial Regulators in the Aftermath of the Financial Crisis (Cambridge: Intersentia, 2015).
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