Skip to Content

FINRA Wants Investors to Know that it Does NOT Approve Securities for Trading

October 28, 2020 Blog

“Investors should be aware that news reports stating that FINRA has approved a security for trading, quoting or listing are wrong in virtually every respect.” This is an important message that the Financial Industry Regulatory Authority (FINRA) wants all individual investors to know.

In addition to inaccurate news headlines, scam artists will often falsely claim to have “FINRA approval” as well, and this too is a claim that is not accurate under any circumstances. If you have lost money in an investment that you made based on false or misleading information, you may be able to recover your losses through FINRA arbitration, and you should speak with a FINRA attorney promptly.

FINRA Verifies Broker Compliance But Does Not Approve or Recommend Securities

FINRA serves a very important, but also clearly limited, role in protecting investors. While FINRAoversees certain activities of brokers and brokerage firms, it does not have any involvement in the regulation of investment securities. This task is left to the U.S. Securities and Exchange Commission (SEC), which itself makes clear that registration of a security does not in any way suggest any form of official endorsement or approval.

FINRA, working in conjunction with the SEC, enforces brokers’ and brokerage firms’ registration requirements (as opposed to the registration requirements for investment securities), and it also verifies brokers’ and brokerage firms’ compliance with the requirements for offering over-the-counter (OTC) securities. However, as FINRA expressly states:

“FINRA does not engage in a qualitative evaluation of the security, nor of the issuer of the security, and does not approve the issuer or the filing . . . . FINRA’s role is to verify that securities firms seeking to begin quoting a security in the OTC market have obtained and reviewed the required financial information about the issuer of the security and have a reasonable basis for believing that the information is accurate and from a reliable source.”

As an individual investor, what does this mean for you? When making investment decisions, you need to make sure that you are relying on accurate information. If an investment opportunity is promoted as “FINRA-approved,” this most likely means that the “opportunity” is actually a scam. Legitimate companies and brokerage firms do not use these types of false statements, and they are well aware of the roles that FINRA and the SEC play in the U.S. securities market.

Learn about more red flags for investment fraud scams.

Can You Recover Your Fraudulent Investment Losses Through FINRA Arbitration?

For investors who lose money as the result of investing based on false and misleading information, FINRA arbitration often provides a source of financial recovery. Brokers and brokerage firms are required to submit to FINRA arbitration for investor disputes, and arbitration provides a fair and cost-effective forum for investors to pursue financial recoveries. If you need to seek to recover fraudulent investment losses, we encourage you to schedule a free initial consultation with a FINRA attorney at Zamansky, LLC.

Speak with a FINRA Attorney about Your Fraudulent Investment Losses

To learn more about the options you may have available to recover your fraudulent investment losses, call 212-742-1414 or contact us online to schedule a free initial consultation. Our FINRA attorneys represent individual investors nationwide, and you pay nothing unless we win.

Client Reviews

“Jake Zamasky and his colleagues represented me in a FINRA arbitration case against a large multinational bank and succeeded in obtaining an award for the full amount of my investment losses. I would highly recommend the Zamansky firm for their experience in securities litigation, their level of detailed research and case preparation, and their ability to effectively fight for what’s right.”

Richard R.

“Throughout my entire case, Jake Zamansky was incredibly responsive and spent time walking me through each step of the process. He is professional and worked with my challenging schedule, even meeting with me nights and on weekends. He knew exactly which turn to take when it came to my case and yet was respectful of any decisions I wanted to make resulting in a positive outcome.”

Donald A.

“Jake Zamansky and his firm represented me in a FINRA arbitration case to recover investment losses. Jake and his team were very professional and worked very hard preparing for trial and then reaching a substantial settlement of our case. I would highly recommend them.”

William E.

“Jake Zamansky represented me in a FINRA arbitration case which allowed me to recover a substantial portion of investment losses. He is truly an expert in this space and I would highly recommend him to those investors who may have been been a victim of investment fraud.”

Chris K.

“Jake and his team did a great job communicating with me throughout the process of my lawsuit. I would recommend him to anyone looking to sue UBS for unethical practices.”

Mike A.
View More