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Alphabet soup: distinguishing the SEC from FINRA

Many investors in California and across the rest of the country routinely see the acronyms SEC and FINRA.

Although many readers might have some or even a great deal of knowledge regarding what stands behind those letters, it is certainly understandable for high numbers of investors to be a bit less than crystal clear regarding the details.

After all, and as noted in an online overview discussing American financial regulatory bodies, "With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest."

The Securities and Exchange Commission was created by the federal government in the wake of the massive American stock market collapse that began in late 1929 and materially influenced the following decade denoted as the Great Depression. Because the market crash owed fundamentally to grossly lax oversight of the financial markets and systemic shortcomings that easily enabled pricing manipulations and other frauds, the SEC was -- and continues to be -- heavily focused on keeping the financial markets taint-free and protecting investors.

FINRA -- the shorthand tag for the Financial Industry Regulatory Authority -- has a decidedly different purpose than does the SEC. FINRA is a self-regulated body that oversees most stock sellers and brokerages across the United States. As such, it makes rules to govern its members, and enforces edicts through arbitration and other mechanisms. As noted in the above-cited primer, "FINRA is overseen by the SEC."

Market integrity is obviously an essential imperative for individuals and organizations seeking to invest their hard-earned dollars. Investment fraud flatly undercuts that integrity by roiling the markets and by shattering investors' confidence and, often, their financial futures.

An investor with questions or concerns regarding the fraudulent behavior of a stock broker or other investment adviser can obtain zealous legal representation from a proven business and commercial attorney well versed in securities matters and in practice before regulatory bodies such as the SEC and FINRA.

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