The success of our financial and economic system hinges on trust and confidence in the markets. When financial advisors, securities brokers, and firms commit investment fraud, they damage firms, employees, investors, and any other stakeholders. Collectively, this damages the markets by reducing investor confidence. Over the history of the stock market, the U.S. government has created and granted authority to several agencies and organizations to oversee activities and secure the market. Even those who don’t invest in the market are familiar with the U.S. Securities and Exchange Commission (SEC), created as part of Franklin Roosevelt’s New Deal.

The SEC remains the primary agency to oversee the financial industry, but it delegates specific task to smaller agencies and organizations that fall under one of the SEC’s five main divisions. Market oversight directed at protecting investors, ensuring fair business practices, and promoting transparency lies in the hands of the Financial Industry Regulatory Authority (FINRA). The U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) also plays a part in holding fraudsters and firms accountable for criminal activities related to the financial industry.

If you are considering reporting fraud to FINRA as a whistleblower, you might face severe consequences because FINRA whistleblowers are not protected like those who report something directly to the SEC. Yet, there are ways to report fraud and remain protected. If you suspect FINRA violations, you need to protect the markets and maintain your personal integrity by revealing bad business practices. Contact the legal team at Price Armstrong so we can advise you on the best way to proceed if you suspect wrongdoing.

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The Financial Industry Regulatory Authority, more often shortened to FINRA, oversees the broker-dealer industry to encourage and enforce honest and fair business practices. FINRA is a non-profit, non-governmental organization authorized by the United States Congress to regulate the financial industry. FINRA carries out its mission and duties through five main activities:

  1. Writing and Implementing Rules

FINRA writes and implements rules for the financial industry that provides investors with basic protections when they engage with the markets. This includes verifying that each person who sells any type of security is trained and licensed after taking a qualifying exam. Additionally, FINRA reviews securities-related advertisements to make sure they are truthful and do not mislead potential investors and that all investors receive full disclosure about a product before they enter a purchase contract. FINRA also remains committed to the idea that financial professionals offer products that fit an investor’s needs.

  1. Enforcement and Discipline

Although FINRA is not a government entity, they have the authority to enforce the rules of the financial industry. Those who violate FINRA’s rules and regulations might face a wide variety of disciplinary actions. FINRA may levy fines against individuals and firms, suspend wrongdoers, bar individuals and firms from the industry, and order restitution. According to their most recent data, FINRA brought more than 1,300 disciplinary actions against individuals and firms, levied almost $65 million in fines, and ordered $66.8 million in restitution to affected investors in 2017.

  1. Detecting Poor Business Practices

FINRA invests a great deal of resources into technology and human capital to monitor and detect wrongdoing in the financial industry. In addition to collecting data on tens of billions of transactions each day, FINRA also works to detect and stop fraudulent practices such as insider trading and unauthorized trading. FINRA’s task force includes hundreds of trained financial experts who conduct routine examinations and investigate complaints from investors. Detection also includes the continued review of advertisements and communication from firms to potential investors.

  1. Educating Investors

Teaching investors about how to detect potential scams and avoid fraud is another way that FINRA protects the markets. They offer several tools on their website for investors to research brokerage firms, learn about financial instruments, and assess investment opportunities. The FINRA Investor Education Foundation also focuses on teaching underserved populations about investing and avoiding fraud.

  1. Dispute Resolution

When disputes occur among investors, firms, and brokers, FINRA provides and oversees the largest securities-related dispute resolution forum in the country, which handles almost 100 percent of all securities-related arbitration and mediation.


Reporting to FINRA and the SEC is a complicated process that requires an experienced attorney. Financial crimes carry serious consequences which alter lives in many cases. Firms and individuals face thousands of dollars in fines, sanctions from FINRA, expulsion from the industry, and criminal prosecution by the SEC. If you suspect wrongdoing, it is in your best interest to report. Although you don’t have protection from FINRA, if you go through the correct channels, you can be protected by the SEC and may even receive compensation for preventing market fraud. Only experienced attorneys who have represented clients in these high-stakes scenarios can help you through these complexities. Without legal representation, you risk FINRA penalties and might even wind up with jail time if the SEC prosecutes.

Price Armstrong remains committed to protecting investors and whistleblowers as they hold wrongdoers accountable. The firm has extensive resources to represent whistleblowers in fraud cases through the FINRA arbitration process and state and federal courts. Our attorneys are aggressive litigators who specialize in high-stakes and high value cases and who will pursue the best outcome for your situation.

If you suspect fraud, contact Price Armstrong at (205) 208-9588 for a free consultation to discuss the best path forward.

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What is the Dodd-Frank Act and how does it apply to me?

Dodd-Frank, short for the Dodd-Frank Wall Street Reform and Consumer Protection Act, is a large piece of financial reform legislation passed by the Obama Administration in response to the 2008 financial crisis. In terms of whistleblowing, a part of the Dodd-Frank expanded then current whistleblower protections granted under the Sarbanes-Oxley Act of 2002.  Under Dodd-Frank, whistleblowers can receive 10 to 30 percent of proceeds from a litigation settlement. Additionally, protected employees also include subsidiary and affiliate employees, who have 180 days to bring a claim against their employer after discovering a violation. If you report the violation to the SEC, you can be covered under Dodd-Frank. FINRA reporting does not provide protection or payment.

What is the False Claims Act?

The False Claims Act is 31 U.S.C. Sections 3729 through 3733 gives citizens and organizations the right to sue a party who has committed fraud against the U.S. Government. The False Claims Act does not deal with securities fraud, so whistleblowers who are reporting FINRA violations are not protected, nor do they receive financial benefits under the False Claims Act.

Who does the SEC consider a whistleblower?

A whistleblower is an individual who voluntarily provides original information to the SEC about a possible securities violation that has occurred, is currently happening, or will occur. The information must lead to a successful SEC action with fines of more than $1,000,000.

Can I submit information to the SEC anonymously?

Yes, but if you want to be eligible for a whistleblowing award, you must be represented by an attorney. Your lawyer can submit your information online or with a hard company form that has been certified by your attorney.

If I reveal my identity, will the SEC maintain confidentiality?

The SEC will take extra measures to protect your identity as much as possible. They will not disclose your identity, even under the Freedom of Information Act. Yet, the SEC cannot protect you from everyone or everything. In some court proceedings, the SEC might be required to provide documents that reveal your identity, and they might share information to other governmental agencies or regulatory bodies. If you report investor or stock market fraud, it is highly likely the SEC will share information with FINRA and vice versa.


If you suspect FINRA violations, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!