Finra Regulation Inc

“Finra is the sole not-for-profit stockholder of finra regulation, inc.”

“Finra, the sole not-for-profit stockholder, elects all members of the governing body.”

“Finra, the sole not-for-profit stockholder, retains the following authority and functions: 1) to exercise overall responsibility for ensuring that the association's statutory and self-regulatory obligations and functions are fulfilled. 2) to delegate authority to the subsidiaries to take actions on behalf of the association. 3) to elect the subsidiary boards of directors. 4) to review the rulemaking and disciplinary decisions of the subsidiaries. 5) to coordinate actions of the subsidiary boards as necessary. 6) to resolve any disputes among the subsidiaries. 7) to administer common overhead and technology of the subsidiaries. 8) to administer the office of internal review as provided in the association's by-laws. 9) to manage external association relations on major policy issues. 10) to direct the subsidiaries to take action necessary to effectuate the purposes and functions of the association. 11) to take action ab initio in an area of responsibility delegated to subsidiaries.”

“The form 990 was reviewed by senior management at various steps throughout the preparation cycle. The joint audit and compensation and human capital committees reviewed and approved the organization's 2024 form 990 by unanimous written consent. The board was provided access to the final form 990 for review (via a portal for board members only) prior to filing.”

“The organization has written conflict of interest policies for board members and officers. The written conflict of interest policy for board members requires initial disclosure of interests that could give rise to conflicts as well as annual disclosure by the same board members. Additionally, the written policy contains an ongoing obligation of board members to disclose potential conflicts of interest as they arise.”

“The organization makes its governing documents and the finra consolidated audited financial statements available upon request.”

“James crowley and ethiopis tafara were volunteer board members in 2024 and did not receive compensation for their services. However, they both received taxable fringe benefits as reported on form 1099-nec.”

“Finra regulation, inc. Is a wholly-controlled subsidiary of the financial industry regulatory authority (finra). As the parent organization, finra incurs all direct and indirect expenses, including salary and benefits. The financial information included in this form 990 is presented on a stand-alone basis, reflecting only those amounts aligned with the programs conducted under the governance of the finra regulation board of directors. The statements and schedules in this form 990 do not represent the consolidated results for finra and its subsidiaries. The 2024 form 990 should be read in conjunction with finra's 2024 annual financial report, which is available at www.finra.org/about/annual-reports. See also separate 2024 forms 990 for related entities including finra and finra investor education foundation.”

“Finra regulation's market regulation department oversees and regulates over-the-counter trading of exchange-listed and non-exchange-listed securities, corporate and municipal debt, asset-backed securities and treasury securities for compliance with finra and municipal securities rulemaking board (msrb) rules and federal securities laws. Market regulation also provides regulatory services to the cboe, miax, nasdaq and nyse exchange groups, as well as the box options exchange, the investors exchange, the long-term stock exchange and the members exchange. In 2024, market regulation opened almost 5,000 reviews or investigations. In addition, the department referred more than 1,400 matters to the securities and exchange commission and other foreign, federal or state regulatory or law enforcement agencies.”

“Finra regulation's member supervision department conducts routine cycle and branch office examinations of its member firms reviewing for compliance with applicable federal securities laws and regulations, finra rules, and when applicable, municipal securities rulemaking board and exchange rules. The exam schedule is derived from a risk-based model that is tailored to focus on specific risks related to each firm, based on their business model, supervisory control system, and prior exam findings. After finra finalizes the initial exam plan, they adjust the firms on the plan over the course of the year in response to changes to their membership (e.g., new finra member firms or firms terminating membership) and firms' risk profiles. Thematic reviews are also conducted based on regulatory intelligence developed internally or assessment of information provided by industry participants that conduct business in areas that present evolving or emerging risk. In 2024, member supervision conducted more than a 1,050 cycle and branch examinations. In addition, member supervision through its national cause and financial crimes detection programs, conducts reviews, investigations and targeted exams. Provides a heightened and expedited review of allegations of serious fraud, serves as a central point of contact internally and externally on fraud-related issues, and consolidates recognized expertise in expedited fraud detection and investigation across several units. The national cause program comprised of the intake, assessment and investigations, performs thousands of intake and risk assessment reviews on regulatory intelligence and triggering events and performs comprehensive reviews and investigations as necessary. The department also includes the complex investigations and intelligence team that focuses on assessing, mitigating and investigating harm by identifying emerging fraud and cyber threats. Specialized investigative teams cover additional focus areas, such as high risk registered representative activities, anti-money laundering, and vulnerable adults and seniors. In 2024, the initial review group reviewed over 69,500 events and referred over 3,200 matters to the sec and other foreign federal or state regulatory or law enforcement agencies for potential violations outside of finra's jurisdiction. Member supervision membership application program (map) serves as the entry point to the securities industry by ensuring that prospective and current finra members meet finra's standards for admission set forth in paragraph (a) under rule 1014, and the application and all supporting documents appear consistent with the federal securities laws, the rules and regulations thereunder, and finra rules. This is accomplished by thoroughly evaluating applicant's financial, operational, supervisory and compliance systems. In 2024, map approved 251 continuing membership applications and 75 new membership applications. Member supervision risk monitoring is the main point of contact with member firms, serving as the central hub of firm-focused regulatory intelligence within finra. This is accomplished by developing and maintaining strong relationships with the membership as well as internal and external stakeholders to ensure information is shared and potential or actual impact to member firms and their customers is addressed appropriately. Risk monitoring identifies thematic issues, trends and emerging risks through staff who have expertise in the business activities of firms in their assigned firm groups.”

“Finra regulation disciplines firms and their associated persons who violate federal securities laws and rules as well as finra and municipal securities rulemaking board (msrb) rules. Through its enforcement department, finra regulation brings disciplinary actions against firms and their associated persons that may result in sanctions, including censures, fines, suspensions and, in egregious cases, expulsions or bars from the industry. In appropriate cases, finra regulation will require firms and individuals to provide restitution to harmed investors and often imposes other conditions on a firm's business to prevent repeated wrongdoing. In 2024, finra regulation brought approximately 628 new disciplinary actions against registered individuals and firms, levied fines totaling more than $66 million and ordered $24 million in restitution to harmed investors. In addition, finra regulation expelled 4 firms from the membership, barred 182 individuals and suspended 342 brokers from association with finra member firms.”

“Any person engaged in the securities business of a firm, including partners, officers, directors, branch managers, department supervisors and salespersons, must register with finra. Through its registration and disclosure department, finra regulation operates crd, the central licensing and registration system for the u.s. Securities industry and its regulators. Finra regulation also operates the investment adviser registration depository on behalf of the sec. These systems contain the registration records of more than 3,200 finra and other registered broker- dealers and more than 32,500 investment advisers, as well as the qualification, employment, and disclosure histories of more than 634,000 active registered individuals. Finra regulation also operates the brokercheck program, an online system for investors to review the backgrounds of investment professionals. Brokercheck contains records on 1.16 million current and former brokers and over 21,000 current and former broker-dealers.”

“Finra regulation's office of dispute resolution operates a dispute resolution forum for investors, brokerage firms and their registered employees, and administers arbitrations and mediations through a network of four regional offices, with 69 hearing locations including one in each state and puerto rico. In 2024, the office of dispute resolution administered 2,469 arbitrations and 506 mediations.”

“Excise tax for covered employees was reported and paid by finra regulation's parent, the financial industry regulatory authority.”

“OTHER CHANGES IN NET ASSETS OR FUND BALANCES PRIMARILY RELATE TO ANY OR ALL OF THE FOLLOWING: CHANGES IN NET ASSETS/LIABILITIES AND ELIMINATION OF INTERCOMPANY TRANSACTIONS. FOR ADDITIONAL INFORMATION PLEASE SEE THE FINRA 2024 ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS. - -XXX-XX-XXXX; Total - -XXX-XX-XXXX;”