By: Kevin Leland
What are your motivations behind your desire to self study and learn the information in order to take the series 7 exam –and pass it on the first try? Please comment below. This is mine:
Bragging rights. I’m a curious guy who values learning. However, I don’t even have an Associates Degree, maybe just half the credits towards one, that are so old, they probably aren’t even transferable. I’m proud of my accomplishments in self study. Although, it’s made me nothing more than a vast wasteland of useless knowledge…Well, until I become a winning contestant on Jeopardy anyway, the many things I know about really don’t have much value. But my ability to learn and retain information, and use it to solve problems has, at times, helped me earn a good, honest, self sufficient, and even ‘entrepreneurial’ living, right alongside ‘degree snobs.’ I used to piss them off by saying ‘Why do I need a college degree, when I can just hire someone with one?’ –As I did back in the day when I was a mortgage loan officer, with a college grad for a Personal Assistant.
Beyond passing the exam and obtaining your qualifications necessary in order to make different types of trades with all types of corporate securities, excluding commodities and futures…
What is your ultimate goal for putting these hard earned, FINRA bestowed credentials to work? Again, comment below. Mine is:
To work for FINRA.
Q002) What does the acronym FINRA stand for, and what is it’s purpose?
A002) FINRA stands for: Financial Industry Regulatory Agency. Their chief role is to protect investors by maintaining the fairness of the U.S. capital markets.
They are the largest independent regulator for all securities firms doing business in the United States. They oversee nearly 4,380 brokerage firms, 162,845 branch offices and 629,640 registered securities representatives. They were formerly known as the NASD: the National Association of Securities Dealers.
Since St. Paul warned us about the sorrows in store for us when we’re motivated by covetousness and the love of money, which is the root of all evil (1 Tim 6:10) –and Michael Douglas, as Gordon Gekko, in ‘Wallstreet’ offers the counterpoint, that “greed, for lack of a better word, is good. It’s right. Greed clarifies, cuts through and captures the essence of the evolutionary spirit.” –we have a need for regulators to make sure greedy bastards like Gekko (and real life con-jobs) are kept in check, and don’t let their love for money end up creating an unfair environment for those investors out to make an honest profit –thus screwing up our entire economy.
Check out this famous ‘Greed is Good’ speech:
Q003) What is the difference between FINRA (Financial Industry Regulatory Agency) and the SEC (Securities Exchange Commision) ?
A003) FINRA is an (SRO) self-regulatory organization that is the front line in overseeing member broker-dealers. The SEC is a government entity that protects individual investors by enforcing securities law, and maintaining stability in the markets. Essentially, the SEC oversees FINRA.
The SEC came about cir. 1932, to try to reestablish investor confidence, and stability in the financial markets after the stock market crash of 1929, that led to the Great Depression. The main principles the SEC maintains are that businesses are truthful with investors about their companies and about the risks of investing in the securities that are offered to the public. They see to it that all investors are treated fairly. When securities laws are violated, the SEC investigates and organizes the criminal case against the wrongdoers.
FINRA is the first line of defense against cheating in the markets. As a self regulating body, close ties to, and inclusion of financial industry movers and shakers can cause circumstances where ‘the fox is watching the henhouse.’ A prime example being the fact that the infamous douche bag, Bernie Madoff, orchestrator of the biggest Ponzi scheme in U.S. history, was Vice President of the NASD (which later became FINRA) FINRA originated around the same time as the SEC. Then in 1971, it created the NASDaq exchange platform. In 1998 it merged with AMEX (the American Stock Exchange) and then recently, when in 2007, the SEC approved the merger between the NASD and the self-regulatory arm of the New York Stock Exchange, FINRA came into existence.
Q004) How is FINRA funded?
A004) By (1) annual fees and basic membership dues paid by individual firm employees, (2) firm fees based on a percentage of a firm’s income, (3) fines levied against offenders of regulations (4) dividends and gains from FINRA investments.
As can be seen in the chart above, taken from: http://www.finra.org/web/groups/corporate/@corp/@about/@ar/documents/corporate/p127312.pdf
FINRA net revenue was close to a billion dollars in 2011. Not too shabby! The top tier of their organizational structure receives pay and bonuses totaling over ten million dollars. Chairman and Chief Executive, Richard G. Ketchum received $2.6 million in pay and bonuses in 2010.
They are striving to increase their educational activities, through the IEF (Investor Education Foundation) especially targeting investors who typically are not taught about the benefits and risks behind making sound investments, and how to be wary of fraud. These individuals include members of the Armed Forces, College Students and retirees.
- FINRA Series 7 Exam Free Study Guide (bangaricontentgallery.com)
- The 10 Most Common FINRA Securities Arbitration Claims in 2012 (minnesotaattorney.com)
- FINRA to Codify its Front-Running Policy (valuewalk.com)
- Securities Regulators Issue Risk Alert for Brokerage Firms to Conduct Effective Branch Office Supervisions (financialcounsel.typepad.com)
- FINRA Regulatory Notice 12-29: Its Impact on Social Media Use (socialmediatoday.com)
- Finra Fines Rodman & Renshaw for Analysts’ Actions (nytimes.com)