What is FINRA? Definition, how it works and examples
The regulator of US brokers, not of every firm in the market — what FINRA oversees, how BrokerCheck works, and where private-market platforms sit in relation to it.
The short answer
What is FINRA? The Financial Industry Regulatory Authority is the self-regulatory organisation, overseen by the SEC, that writes and enforces the rules for US broker-dealer firms and the people who sell securities for them. It is a private not-for-profit, not a government agency, and it was formed in July 2007. For a private-company investor the useful question is whether the firm in front of you is under FINRA at all. A broker selling you a private placement must be.
What does FINRA regulate, and what does it not?
FINRA was created when the SEC approved, on 26 July 2007, the consolidation of the NASD with the member regulation, enforcement and arbitration functions of the New York Stock Exchange. As a self-regulatory organisation, it is funded by its members rather than by taxpayers, and the SEC approves its rules and oversees its work. Rules A rulebook binding member broker-dealers and their staff — sales practice, suitability, communications, private placements. Registration Firms and individuals register through the Central Registration Depository; individuals must pass qualification exams.
What is a FINRA licence — Series 7, Series 6 and the SIE?
Strictly, FINRA does not issue a licence or a certification. It registers individuals with a member firm once they have passed the qualification exams for the work they do. In everyday use, “FINRA licence” means that registration. The entry exam, the SIE, can be taken by anyone aged 18 or over without a firm; the representative-level exams need a sponsoring member firm, and the SIE is a corequisite for each of them. Qualifications lapse.
What is a FINRA CRD number, and how do you check a broker?
The CRD — 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, and the record behind it holds employment history, qualifications and disclosures. Investment advisers file through the parallel IARD system and carry CRD numbers as well. BrokerCheck is the free public window onto those records.
How FINRA touches a private placement: Rule 5123
When a member broker-dealer sells a private placement — a Rule 506(c) round, for instance — FINRA Rule 5123 requires it to file the private placement memorandum, term sheet or other offering document with FINRA within 15 calendar days of the date of first sale, or tell FINRA none was used. The exemptions are narrower than they look: sales made solely to institutional buyers, qualified purchasers and entity-type accredited investors are exempt, but accredited investors who qualify as individuals on income or net worth are not on the list.
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 — advising venture capital funds, or private funds with less than $150 million of US assets — and instead files reports on Form ADV with the SEC. It is an adviser, so its regulator is the SEC, not FINRA. 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. Two consequences follow for an investor.
The terms this page uses
Self-regulatory organisation (SRO) An industry body with authority to write and enforce rules for its members, under the oversight of a government regulator — for FINRA, 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.
Questions about FINRA
Is FINRA a government agency? No. FINRA is a private not-for-profit membership organisation. It operates under SEC oversight, and the SEC approves its rules, but it is funded by its members rather than by taxpayers. What is FINRA registration, and is it the same as a licence? Registration is the record that an individual, having passed the required exams, is associated with a member firm and permitted to do a type of securities business. People call it a licence; FINRA calls it registration. It lapses when you leave the industry, after a set validity period.
Is FINRA a government agency?
No. FINRA is a private not-for-profit membership organisation. It operates under SEC oversight, and the SEC approves its rules, but it is funded by its members rather than by taxpayers.
What is FINRA registration, and is it the same as a licence?
Registration is the record that an individual, having passed the required exams, is associated with a member firm and permitted to do a type of securities business. People call it a licence; FINRA calls it registration. It lapses when you leave the industry, after a set validity period.
What is the FINRA Series 7, and do I need it to invest?
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.
Does FINRA protect my investment in a private company?
Only indirectly, and only if a member broker sold it to you — 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.
How do I look up a FINRA CRD number?
Search the person’s or firm’s name on BrokerCheck; the report shows the CRD number with the record behind it. Investment adviser records are also searchable on the SEC’s adviser database using the same number.
Where every figure on this page comes from
Every figure and rule was checked against the primary source on 1 October 2026. Exam fees and formats are set by FINRA and change; the exam pages carry the current version.