What is the role of the Financial Industry Regulatory Authority (FINRA) regarding investment advisers?

The Financial Industry Regulatory Authority (FINRA) plays a specific role in the regulation of the financial services industry, particularly regarding broker-dealers and investment advisers. While FINRA does not oversee investment advisers in the same comprehensive manner as it does broker-dealers, it does have a role in monitoring certain aspects of investment advisers that operate in conjunction with broker-dealers. This includes areas such as compliance with securities regulations, ethical conduct, and the protection of investors when investment advisers also handle transactions related to securities.

FINRA's jurisdiction mainly covers broker-dealers, particularly those members who are registered with it. However, it does impose certain regulations and conducts examinations on investment advisers associated with broker-dealers, ensuring that their activities align with required standards. This regulatory framework helps maintain the integrity and transparency of financial markets, ensuring that advisers operate within established guidelines.

This understanding of FINRA’s role highlights its specific monitoring responsibilities over investment advisers in contexts related to their interactions with broker-dealers, rather than asserting exclusive oversight over all investment advisers or managing firms directly. This nuanced relationship is essential for grasping the regulatory landscape in which investment advisers operate.