FINRA Rules Governing Investor Fraud
FINRA (Financial Industry Regulatory Authority) is a self-regulatory organization that oversees and regulates the securities industry in the United States. Its rules are designed to protect investors from fraud and ensure fair dealing by member firms.
FINRA Rule 2150 prohibits any fraudulent or deceptive act or practice by a member firm or its associated persons. This includes misrepresentations or omissions of material facts in connection with the sale of securities or investment products. Firms are required to disclose all material facts to customers and to avoid making exaggerated or misleading statements.
FINRA Rule 2165 allows member firms to place temporary holds on disbursements of funds or securities from customer accounts if they suspect financial exploitation of a vulnerable adult. The rule requires that the hold be promptly reported to a designated person and reviewed by the firm for suitability and the customer's best interests.
FINRA Rule 4512 requires member firms to maintain accurate and complete records of customer information, including account information, personal information, and financial information. This rule is designed to prevent fraud and facilitate proper supervision by member firms.
FINRA Rule 4530 requires member firms to report certain events to FINRA, including customer complaints, regulatory actions, and criminal charges. This rule is designed to ensure transparency and accountability by member firms and to help identify potential fraudulent or unethical behavior.
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Overall, FINRA's rules aim to promote fair dealing, protect investors, and maintain the integrity of the securities industry. If you believe you have been the victim of investment fraud, you can file a complaint with FINRA or contact an attorney who specializes in securities law.
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