October 2, 2026 · 8 min read
What Is FINRA? Definition, How It Works and Examples
The body that regulates US brokers and their staff: what it oversees, how to check a broker for free, and where private-market platforms fit.
- Market structure
- Regulators
- Broker-dealers
What is FINRA? The Financial Industry Regulatory Authority writes and enforces the rules for US broker-dealers and the people who sell securities for them. A broker-dealer is a firm that buys and sells securities for customers. FINRA is a self-regulatory organization: a private not-for-profit overseen by the SEC, the US securities regulator. It is not a government agency. It was formed in July 2007.
If you invest in private companies, the useful question is whether the firm in front of you falls under FINRA at all. A broker selling you a private placement, a sale of securities that is not offered to the public, must be a FINRA member. The manager of a fund or an SPV, a vehicle set up for one deal, usually is not. It answers to the SEC as an investment adviser. The protections, the public files and the complaint routes differ accordingly.
639,723
Registered representatives in the US securities industry
625
New disciplinary actions filed by FINRA
$99.6M
Fines and disgorgement (giving up improper gains), plus $17.1M of restitution to customers
What Does FINRA Regulate, and What Does It Not?
The SEC approved the creation of FINRA on July 26, 2007. It combined the NASD, the National Association of Securities Dealers, with the member regulation, enforcement and arbitration work of the New York Stock Exchange. As a self-regulatory organization, FINRA is funded by its members. Taxpayers do not fund it. The SEC approves its rules and oversees its work.
- Rules
- A rulebook binding member broker-dealers and their staff. It covers sales practice, suitability, communications and private placements.
- Registration
- Firms and individuals register through the Central Registration Depository. Individuals must pass qualification exams.
- Examinations
- Routine and targeted examinations of member firms for compliance with FINRA rules and federal securities law.
- Enforcement
- Fines, suspensions, bars and expulsions, plus referrals to the SEC and other authorities.
- Market surveillance
- Monitoring of trading for manipulation and abuse, and running the facilities where trades are reported.
- Dispute resolution
- An arbitration and mediation forum for disputes between investors, firms and representatives.
The limit lies in who its members are. FINRA oversees broker-dealers and their registered people. Other kinds of financial firm are outside it. An investment adviser that does not also run a broker-dealer answers to the SEC or to its state. Banks, insurers and commodity firms have their own regulators. That boundary is why the same private deal can reach you through a FINRA member in one case and through an SEC-reporting adviser in another.
What Is FINRA Certification? Licenses and Exams Explained
Strictly speaking, FINRA issues neither a license nor a certification. It registers individuals with a member firm once they have passed the qualification exams for their work. In everyday speech, a “FINRA license” means that registration. Anyone aged 18 or over can take the entry exam, the SIE (Securities Industry Essentials), without a firm. The exams for representatives need a sponsoring member firm, and each one also requires the SIE.
Passing an exam does not register you. You are registered only while associated with a member firm
As of October 2026 · FINRA qualification exam pages · checked 10.01.2026
Qualifications lapse. A representative exam stays valid for two years after a registration ends, and the SIE for four. FINRA’s Maintaining Qualifications Program can extend that to five years with continuing education. Three licenses also make the holder an accredited investor, a status that allows you to buy private offerings. They are the Series 7, the Series 82 and the Series 65, which FINRA administers for the states. Each counts only while held in good standing.
What Is a FINRA CRD Number, and How Do You Check a Broker?
The CRD, or Central Registration Depository, is the registration system FINRA runs for the industry. Every registered individual and firm gets a unique CRD number that stays with them through their career. The file behind it holds employment history, qualifications and disclosures. Investment advisers file through a parallel system, IARD, and carry CRD numbers as well.
BrokerCheck is the free public window onto those files. For an individual, it shows the last ten years of employment and current registrations and licenses. A disclosure section lists customer disputes, disciplinary events and certain criminal and financial matters. It also includes investment adviser firms and representatives, drawn from the SEC’s IARD data. That makes it the first place to check anyone who asks you to invest.
What Is FINRA Arbitration?
Brokerage account agreements commonly send disputes to FINRA’s arbitration forum instead of a court. A panel of arbitrators hears the case, and its award is binding on the parties. The forum covers disputes with member firms and their representatives. A dispute with an adviser or a vehicle that is not a FINRA member falls outside it.
How FINRA Touches a Private Placement: Rule 5123
A member broker-dealer may sell a private placement, such as a Rule 506(c) round, an offering that may be advertised. FINRA Rule 5123 then requires it to file the offering document with FINRA within 15 calendar days of the first sale. That can be the private placement memorandum, the term sheet or another offering document. If none was used, the broker must tell FINRA so. The exemptions are narrower than they look. Sales made only to institutional buyers, qualified purchasers and accredited investors that are entities are exempt. Individuals who are accredited on income or net worth are not on the exempt list.
Illustrative cases for hypothetical offerings. One individual buyer is enough to bring a member’s sale inside the filing duty. The 15 days are calendar days, so weekends count
FINRA Rule 5123(a)–(b); Rule 501(a)(1), (2), (3), (7), (9), (12) entity categories · as of October 2026
Where Does an Exempt Reporting Adviser Sit Relative to FINRA?
An exempt reporting adviser is an investment adviser that relies on an exemption from SEC registration. It advises venture capital funds, or private funds with less than $150 million of US assets. Instead of registering, it files reports on Form ADV with the SEC. It is an adviser, so its regulator is the SEC. FINRA does not oversee it.
Axevil is an exempt reporting adviser, SEC file No. 802-126907, CRD 323970. It is not a broker-dealer and not a member of FINRA or SIPC. SIPC, the Securities Investor Protection Corporation, covers accounts at member broker-dealers that fail. Two consequences follow for an investor. First, SIPC cover does not apply to an Axevil investment. That cover reaches up to $500,000, including $250,000 of cash, and never covers a fall in value. Second, Axevil is not listed as a broker-dealer, and its adviser file is found by its CRD number. Each deal is held in a dedicated Delaware SPV managed by Axevil Capital, LLC. See what an SPV is.
Common Mistakes
- “FINRA-approved” dealsFINRA does not approve offerings. A Rule 5123 filing is a notice by the broker. It does not endorse the investment.
- Assuming every platform is a brokerAdvisers and SPV managers are regulated differently. Ask which regime a firm is under before relying on a protection it may not have.
- Treating SIPC as insurance against lossesSIPC restores missing securities and cash when a member broker fails. It does not cover a decline in value.
- Checking only the firmBrokerCheck covers individuals too. The person calling you may carry disclosures that the firm’s page does not show.
FINRA regulates brokers and the people who work for them. Before you invest, find out whether a firm is a broker, an adviser or neither. That decides who supervises it and what protects you.
The Terms This Page Uses
- Self-regulatory organization (SRO)
- An industry body with authority to write and enforce rules for its members, under the oversight of a government regulator. For FINRA, that regulator is the SEC.
- Broker-dealer
- A firm in the business of buying and selling securities for customers or for itself. In the US it must register with the SEC and join FINRA.
- Registered representative
- An individual registered with FINRA through a member firm, after passing the exams for the products they sell.
- SIE
- Securities Industry Essentials, FINRA’s entry exam. Anyone 18 or over can take it, and each representative exam also requires it.
- CRD number
- The unique number the Central Registration Depository gives each registered individual and firm. It is the key to their public file.
- BrokerCheck
- FINRA’s free search tool for the registration, employment and disclosure files of brokers and investment advisers.
- Rule 5123
- The FINRA rule that makes a member broker file private placement offering documents within 15 calendar days of the first sale.
- Exempt reporting adviser
- An investment adviser exempt from SEC registration that still reports on Form ADV, typically an adviser to venture or small private funds.
- SIPC
- The Securities Investor Protection Corporation. It restores customers’ securities and cash, up to $500,000 including $250,000 cash, when a member broker fails.
- Rule 506(c)
- The advertised private-placement exemption. A member broker selling one files the offering documents under Rule 5123.
Questions About FINRA
No. FINRA is a private not-for-profit membership organization. It works under SEC oversight, and the SEC approves its rules. Its members fund it, and taxpayers do not.
Registration shows that an individual has passed the required exams and is associated with a member firm. It permits them to do a set type of securities business. People call it a license, and FINRA calls it registration. It lapses when you leave the industry, after a set validity period.
It is whether a person’s registration is active. A registration lasts while the person is associated with a member firm. After it ends, a representative exam stays valid for two years and the SIE for four. FINRA’s Maintaining Qualifications Program can extend that to five years.
The Series 7 qualifies a general securities representative to sell nearly all securities products. Investors do not need it. Holding it in good standing does, however, make a person an accredited investor under SEC rules.
It is the exam for representatives who sell mutual funds, variable annuities and life insurance, unit investment trusts (UITs) and municipal fund securities. It has 50 items, takes 1 hour 30 minutes and costs $100. Like the Series 7, it needs a sponsoring member firm and the SIE.
The SIE, or Securities Industry Essentials, is FINRA’s entry exam. Anyone aged 18 or over can take it without a sponsoring firm. It has 75 items, takes 1 hour 45 minutes and costs $100. Its result stays valid for four years, and each representative exam requires it.
Only indirectly, and only if a member broker sold it to you. The protection comes through its conduct rules, the Rule 5123 filing and the arbitration forum. FINRA does not vet the company, and neither FINRA nor SIPC protects against a loss of value.
It means finding a person’s or firm’s CRD number and the file behind it. Search the name on BrokerCheck. The report shows the CRD number together with the registration and disclosure history. Investment adviser files can also be searched on the SEC’s adviser database with the same number.
Where Every Figure on This Page Comes From
Every figure and rule was checked against the primary source on October 1, 2026. FINRA sets exam fees and formats, and they change. The exam pages carry the current version.
- 01FINRACurrent pageAbout FINRA — private not-for-profit SRO under SEC oversight
- 02US Securities and Exchange Commission07.26.2007SEC approves consolidation of NASD and NYSE member regulation as FINRA
- 03FINRA2025 dataKey statistics — 625 disciplinary actions, $99.6M fines, $17.1M restitution in 2025
- 04FINRA06.01.20262026 Industry Snapshot — 639,723 registered representatives in 2025
- 05FINRACurrent pageSIE exam — eligibility, format, fee, four-year validity
- 06FINRACurrent pageSeries 7 exam — scope, format, fee, sponsorship
- 07FINRACurrent pageSeries 6 exam — scope, format, fee
- 08FINRACurrent pageSeries 82 exam — private placements
- 09FINRACurrent pageExam credit and validity — two years, four for the SIE, up to five with MQP
- 10FINRACurrent pageAbout BrokerCheck — what a report shows
- 11FINRACurrent pageCentral Registration Depository (CRD)
- 12FINRACurrent ruleRule 5123 — private placement filing within 15 calendar days, exemptions
- 13US Securities and Exchange Commission2012Dodd-Frank changes to adviser registration — exempt reporting advisers
- 14SIPCCurrent pageWhat SIPC protects — $500,000 including $250,000 cash
This page explains how a market works. It is not investment advice, not a recommendation of any security, strategy or company, and not an offer to sell or a solicitation to buy anything. Private companies may never list or be acquired, positions in them can be illiquid for years, and the entire amount invested can be lost. Figures are accurate as of the dates shown and change. Requirements for investor status, and the tax treatment of a private holding, differ by jurisdiction — the jurisdiction is named wherever this page discusses either. Prepared by the AXEVIL Capital research team.
What closed on the private market in the past two weeks
The rounds that priced, the tender offers that opened and the listings that filed — with the structure of each deal and the date on every figure. Written by the team that reads the paperwork.
Where to go from here
Securities lawWhat Is Rule 506(c)? Definition, How It Works and ExamplesReg D 506c lets a private offering be advertised to the public if every buyer is an accredited investor whose status is checked. How it works and the checks.
Securities lawWhat Is an Accredited Investor? Definition, How It Works and ExamplesAccredited investor meaning: a person or entity that passes an SEC test on income ($200K), net worth ($1M) or a securities license and may buy private deals.