Finra Regulation Inc

“During tax year 2013, or a portion thereof, the following finra regulation, inc. Directors also served together as members of the board of nyse regulation: dr. Shirley ann jackson kurt p. Stocker robert l. D. Colby and gary h. Stern had a business relationship during 2013 as they served together on the board of the depository trust clearing corporation.”

“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 audit and management compensation committees reviewed and approved the organization's 2013 form 990 on october 3, 2014. The board was provided access to the final form 990 for review (via a website for board members only) prior to filing.”

“The organization has written conflict of interest policies for board members and employees. 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 code of conduct policy requires employees to certify annually as to their compliance with the written policy. The written policy contains an ongoing obligation for employees to inform finra of all brokerage accounts in which they have an interest and to arrange for finra to receive duplicate account statements. Finra reviews transactions in employees' brokerage accounts to ensure compliance with finra's investment restrictions. Among other things, these restrictions prohibit employees from having an interest in a broker-dealer or entity that derives 10% or more of its revenue, net of interest expense, from broker-dealer subsidiaries or affiliates. A list of prohibited companies is posted on finra's corporate intranet. Finra's department heads have access to several online reports that help them avoid assigning an employee to work on a project that would give rise to a conflict. For instance, a manager can determine whether an employee's stock holdings would conflict with a proposed finra assignment (e.g., assigning an employee to negotiate a contract with a vendor in which the employee has a significant stock position). Employees are regularly reminded of the resources that are available when they are unsure what to do. In addition to talking to departmental management, employees can discuss conflict-related concerns with finra's office of general counsel or ethics manager. If they are uncomfortable disclosing an issue and disclosing their identity, they can use finra's 24-hour ethicspoint hotline to pose questions or report concerns. Communications made through ethicspoint are confidential and, if the employee wishes, anonymous. Finra's whistleblower policy forbids retaliation against employees who report suspected misconduct in good faith, even if the report ultimately proves to be erroneous.”

“The management compensation committee of the finra board of governors (the "committee") is responsible for setting pay for executives of finra and subsidiaries whose total compensation, including incentive compensation, may exceed $1 million. The committee is comprised of four non-employee, non-securities industry members of the board of governors. The committee met on january 30, 2013 and february 12, 2013 to establish incentive compensation attributable to the performance of services during calendar year 2012 and to establish base salaries for calendar year 2013. As a general policy, finra has determined its competitive compensation positioning should be considered against a broad section of financial services/capital market companies, as this sector is the most likely from which we recruit talent and talent is recruited from us. We also benchmark against general industry positions and law departments for jobs that are not unique to the financial services industry. The committee engaged mercer, inc. ("mercer"), a third-party compensation consultant, to prepare a compensation study for review at these meetings. In determining a benchmarking strategy for key executives, financial services organizations (broker-dealers, investment banks, federal reserve banks, commercial banks, insurance companies, exchanges and regulators) were determined to be the most relevant groups for comparison purposes. The committee and mercer engaged in substantial research and consideration of the functions and operations of several potential comparators as well as general competitive conditions. In determining specific salary and incentive compensation levels for officers and key employees, management and the committee consider: 1) operational results 2) strategic initiatives 3) financial health/results 4) individual performance 5) competitive compensation levels as prepared by mercer, inc., a third-party compensation consultant the committee's minutes of the january 30, 2013 and february 12, 2013 meetings were reviewed and approved as accurate and complete following the committee's approval of the senior executive compensation packages. The full board further approved the 2012 incentive compensation of the ceo at its meeting on february 13, 2013. All compensation committee members voted for the proposed level of executive compensation.”

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

“The officers / key employees listed in form 990, part vii, devote an average total of 60 hours per week to the filing organization and any or all of the following related organizations: financial industry regulatory authority, inc. Finra dispute resolution, inc., and finra investor education foundation.”

“The financial information included in the form 990 is presented on a stand-alone basis with all significant intercompany receivable and payable amounts eliminated and does not represent the consolidated results for financial industry regulatory authority, inc. (finra) and its subsidiaries. The financial information presented reflects estimates of overhead allocations. The 2013 form 990 should be read in connection with the 2013 finra annual financial report which is available @ www.finra.org. See also separate 2013 form 990's for related entities, including finra, finra dispute resolution, inc., and finra investor education foundation.”

“Finra is an independent, non-governmental regulator for all securities firms doing business with the public in the united states. Through finra regulation, finra oversees nearly 4,100 brokerage firms, about 161,000 branch offices and almost 636,000 registered securities representatives. Finra is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. 4a) market regulation finra's market regulation department oversees and regulates over-the-counter trading of exchange-listed and non-exchange-listed securities and corporate and municipal debt for compliance with finra and municipal securities rulemaking board (msrb) and federal securities laws. Market regulation also provides regulatory services to nasdaq omx, nasdaq omx phlx, nasdaq omx bx, nyse, nyse arca and direct edge. In 2013, market regulation opened 5,318 reviews or investigations and 188 examinations. In addition, the department referred 166 matters to the securities and exchange commission. 4b) member regulation finra's member regulation department has a comprehensive examination program with dedicated resources of nearly 1,100 employees. Staff from finra member regulation conduct regular examinations on a schedule that is established based on a risk-profile model. In addition, member regulation conducts targeted examinations based on investor complaints, referrals from other finra departments, terminations of brokerage employees for cause, arbitrations and referrals from other regulators. Member regulation also determines examination priorities and conducts special "sweeps" to target issues of immediate concern. In 2013, finra member regulation conducted nearly 1,900 regular examinations and nearly 7,000 targeted and sweep reviews that resulted in over 3,700 examinations. 4c) enforcement federal law gives finra the authority to discipline securities firms and individuals in the securities industry who violate the federal securities laws and rules as well as finra and municipal securities rulemaking board (msrb) rules. Through its enforcement and market regulation departments, finra brings disciplinary actions against firms and their employees that may result in sanctions including censures, fines, suspensions and, in egregious cases, expulsions or bars from the industry. In appropriate cases, finra 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 2013, finra brought 1,535 disciplinary actions against registered individuals and firms and levied fines totaling more than $60 million. In addition, finra expelled 24 firms from the securities industry, suspended 38 firms, barred 429 individuals and suspended 670 brokers from association with finra-regulated firms. 4d) office of fraud detection and market intelligence finra's office of fraud detection and market intelligence (ofdmi)provides a heightened and expedited review of allegations of serious frauds, a centralized point of contact internally and externally on fraud issues, and consolidates recognized expertise in expedited fraud detection and investigation. In addition, this department is responsible for conducting insider-trading and fraud surveillance for all otc, nasdaq-, nyse and nyse amex- listed issues across all u.s. Exchanges. The department houses the central review group which is responsible for the triage review of complaints and broker-dealer filings. Ofdmi also oversees finra's whistleblower program. In 2013, the central review group reviewed over 26,000 filings, complaints, tips and arbitration-related matters. The insider trading surveillance, fraud surveillance and whistleblower units referred conducted investigations which resulted in over 660 referrals to the sec, other federal and state law enforcement agencies or other internal finra departments. These referrals involved insider trading, microcap fraud, ponzi-typ”

“Other changes in net assets or fund balances primarily relate to any or all of the following: changes in net income/(loss), unrecognized employee benefit plan amounts and unrealized gain/(l0ss) on investments. For additional information please see the finra 2013 annual financial report which is available @ www.finra.org.”