What Is FINRA? All About Financial Industry Regulatory Authority

CloudCodes Software
4 min readAug 25, 2021


What is FINRA?

Before moving forward to understand how a CASB can help financial firms, let us first understand what is FINRA. FINRA i.e., the Financial Industry Regulatory Authority, is an independent regulator security firm in the US. This security is that financial instrument, which includes stocks, bonds, etc., which could be freely traded on open markets. FINRA is dedicated to investor protection as well as market integrity via effective & efficient broker-dealer’s regulations. FINRA is not a government’s part. They are a non-profit organization that is authorized for protecting investors by ensuring that this broker-dealer industry operates in a manner that is fair and honest.

What is the Need of FINRA?

What are FINRA needs, describe the following:

  • Educating investors
  • Fostering transparency in the market
  • Writing/enforcing rules that govern activities of broker-dealers with brokers
  • Examining the companies for compliance with these rules

In the year 2016, via aggressive vigilance, many disciplinary actions were taken against registered brokers as well as firms. And millions were put into fines ordering millions in restitution to the harmed investors. There were fraud and insider trading cases referred to SEC and other agencies for litigation and prosecution.

Why Financial Industry Regulatory Authority is Important?

FINRA regulation has a vital role to play in the US financial-system via enforcing superior ethics standards, and by bringing in required resources as well as the expertise to regulate and enhance investor safeguards as well as market integrity, all of which at no such cost to the taxpayers. Every investor in the US is relying on one particular aspect and, i.e., fair financial market, and this is why FINRA regulation is working day in day out for ensuring just that:

  • All investors receive essential protection which they thoroughly deserve
  • Anyone selling ay security product has to be tested as well as qualified, and also must be licensed
  • All securities products advertisements that are used must be truthful, and they should not be misleading
  • Any of the security products that are sold to investors must be suitable for the needs of those investors
  • Investors must get absolute disclosure regarding investment product much before its purchase

FINRA technology is crucial to protect investors, and also it has become a chief component of FINRA’s ability to undertake the following:

  • Oversee brokerage firms much effectively
  • Monitor US equity market accurately
  • Detect potential frauds quickly
  • Keep the investors always informed via useful tools

What is the Cost of FINRA Non-Compliance?

Even with its upside, FINRA also has multiple challenges, which impact social media adoption in enterprises. First of all, social media is promoting a higher level of transparency, and many businesses might not be ready to change their work cultures overnight. The other challenge that is faced is associated with the risk that lies with the transactions of sensitive information being leaking via these social media practices. People can post or share things that are critical and not supposed to be shared.

It can impact companies’ intellectual property, which can get leaked, and customer data also gets exposed, and other such out-of-compliance activities that can take place. FINRA compliance is a real need for financial companies. Social media has the potential of making things easy to be sharing anything that might not be supposed to be shared, and this could be cause for more significant concern as being depended upon the scope of businesses.

How Can a CASB Help Enterprises with FINRA Compliance?

All industries have compliance concerns, like FINRA/SEC rules that are there for financial firms. Cloud services can sometimes become the vectors, which can perhaps be the easiest ones for these compliance violations due to the lack of oversight, which is associated with the ease of data being shared and collaborated over the cloud. Data saved in these cloud storage services can make up for a majority of such Data Loss prevention (DLP) violations.

Companies required a way of gaining visibility as well as control over these cloud services for helping companies prevent the loss of sensitive data and comply with these regulation policies as well as industry guidance, to report such cloud violations. Cloud Access Security Brokers help companies in this regard much. The customized CASB solution by CloudCodes, which is a leading name in this sector, can help financial firms in enhancing their cloud security protocols, thus making the process of achieving FINRA compliance much more accessible.



CloudCodes Software

CloudCodes is a cloud security solution provider founded in 2011. We focus on providing cloud security solutions to enterprise customers through its SSO.