Regulatory Actions

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The protection of investor rights through the regulation of the financial services industry is the primary responsibility of regulators. The financial services industry is one of the most highly regulated industries in the United States. The regulation is accomplished through the use of the Self-Regulatory Organization (SRO) model which allows the financial services industry to regulate themselves. The SRO regulatory process was established through the creation of financial industry standards promulgated through rules and regulations for member firms and its representatives. Member firms and its representatives are required comply with financial industry rules and regulations as a condition of membership.


The Financial Industry Regulatory Authority (FINRA) is the SRO responsible for rule-making and the compliance of brokerage firms and its representatives as members of FINRA. The Securities Exchange Commission (SEC) approved the establishment of FINRA in August 2007 which resulted in the consolidation of the National Association of Securities Dealers (NASD) and the New York Stock Exchange (NYSE) regulatory bodies. FINRA has established sales practice rules and regulations to govern the conduct of brokerage firms and its representatives to protect investor rights. The violation of sales practice rules and regulations may lead to FINRA Disciplinary Actions.


The Securities Exchange Commission (SEC) are empowered by Congress and charged with the responsibility for rule-making and compliance designed to govern the activities of registered investment advisors (RIA). RIAs are required to act on the behalf of its customers as a fiduciary. As a fiduciary, RIAs are required to act in their client’s best interests, including the avoidance of any conflicts of interest and to provide full disclosure of any business relationships which represent potential conflicts of interest.

Recent changes in securities industry regulations have divided supervisory responsibilities for RIAs between state securities regulators and Securities Exchange Commission (SEC) based on the amount of Assets Under Management (AUM) as follows:

  • Under $100 Million – State Regulators
  • Over $100 Million – SEC Regulators.

Check for securities industry violations of rules and regulations by Registered Investment Advisers and their representatives in SEC Disciplinary Actions.

KlaymanToskes is a securities litigation law firm dedicated to the protection of investor rights. We can help investors who have suffered damages as the result of the violation of securities industry rules and regulations.

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