FINRA vs SEC: What’s the Difference?
- April 1, 2025
- Posted by: 'FINRA Exam Mastery'
- Category: Finance
⚖️ FINRA vs. SEC: What’s the Difference?
When studying for exams like the Series 6, Series 7, Series 24, or Series 63, understanding the difference between FINRA and the SEC is essential. These two regulatory bodies both oversee financial markets—but they serve distinct roles with different authority and jurisdictions.
Here’s a side-by-side breakdown of what each one does, who they regulate, and how they differ.
🏛️ What Is the SEC?
SEC = Securities and Exchange Commission
- A federal government agency created by the Securities Exchange Act of 1934
- Oversees the entire U.S. securities industry
- Enforces federal securities laws
🔑 Core Responsibilities:
- Regulates issuers of securities (public companies)
- Oversees national exchanges (e.g., NYSE, Nasdaq)
- Reviews corporate filings (e.g., 10-K, 10-Q, 8-K)
- Investigates fraud, insider trading, and market manipulation
- Sets rules for investment advisers, mutual funds, and broker-dealers at the federal level
📌 The SEC is the top-level regulatory authority in the U.S. securities market.
🧑💼 What Is FINRA?
FINRA = Financial Industry Regulatory Authority
- A self-regulatory organization (SRO)
- Not a government agency—but authorized by the SEC
- Regulates broker-dealers and their registered representatives
🔑 Core Responsibilities:
- Administers licensing exams (e.g., SIE, Series 6, Series 7, Series 24)
- Monitors broker-dealer compliance with rules and procedures
- Conducts firm inspections and disciplinary actions
- Approves and reviews advertising and communications (Rule 2210)
- Operates the CRD system and BrokerCheck database
📌 FINRA is like the industry’s internal enforcement arm, under the SEC’s supervision.
📊 Side-by-Side Comparison
| Feature | SEC | FINRA |
|---|---|---|
| Type | Federal government agency | Self-regulatory organization (SRO) |
| Created by | Congress – Securities Exchange Act of 1934 | Merger of NASD and NYSE Regulation (2007) |
| Oversees | Public companies, investment advisers | Broker-dealers, registered reps |
| Authority Level | Highest federal authority | Operates under SEC supervision |
| Exam Administration | No | ✅ (SIE, Series 6, 7, 24, etc.) |
| Enforces Rules For | Issuers, exchanges, IAs, mutual funds | Broker-dealers and their reps |
| Filing Oversight | Corporate disclosures (10-K, 8-K, etc.) | Form U4, U5, advertising reviews |
| Disciplinary Action Scope | Market-wide, including civil penalties | Firm-level and individual sanctions |
🧠 Quick Memory Trick
- SEC = “Securities Enforcement Commission” (Federal rules, market-wide protection)
- FINRA = “Firm & Individual Regulation Nationally Administered” (Licensing and conduct)
🧾 On the Series Exams…
Expect exam questions like:
- “Which agency enforces the Investment Advisers Act of 1940?” → SEC
- “Who approves retail communication before use?” → FINRA
- “What is the role of the SEC in securities registration?” → Review and enforce disclosure
- “Who administers the Series 6 or 7 exam?” → FINRA, under SEC authorization
🎯 Get exam-ready with side-by-side agency comparisons, rule-based practice questions, and full regulatory drills at
👉 finra-exam-mastery.com