Updated: Apr 25
The Financial Industry Regulatory Authority (FINRA), is a regulatory organization that controls a number of aspects of the securities industry. FINRA is the successor to the National Association of Securities Dealers (NASD) plays a significant role in protecting investors.
FINRA’s Goals and Responsibilities
FINRA seeks to ensure the fair and honest operations of the securities industry. Per FINRA's website, they strive to safeguard the following:
The basic protection of every investor
The qualification and certification of anyone who sells securities products
Truthfulness in securities advertisements
That securities sold to investors are in line with the individual’s needs
That investors receive a full disclosure before they purchase an investment product
To achieve these objectives, FINRA creates and administers the rules that govern the activities of the securities industry. Accordingly, FINRA audits compliance with these rules, and works to educate investors.
FINRA Rule 2090, Know Your Customer
FINRA Rule 2090 mandates that member firms must “use reasonable diligence, in regard to the opening and maintenance of every account, to know (and retain) the essential facts concerning every customer and concerning the authority of each person acting on behalf of such customer.” The obligation commences with the start of the customer/broker relationship and continues for the life of the relationship. To be compliant with Rule 2090, broker-dealers should “retain” the “essential facts” regarding each of their customers.
Per Rule 2090’s “Supplementary Material,” “essential facts” are those essential details that are required to:
Effectively manage the customer relationship
Operate according to any specific guidelines for that account
Know the authority of any individual acting on behalf of the customer
Adhere to applicable laws, rules, and regulations
eLearning for FINRA Compliance
Following the scandals that have plagued the financial services industry over the last few decades, it has become significantly more complicated and expensive to operate within regulatory requirements, as they have never been as strict as they are today. In today’s financial services climate, compliance training has become a critical element for any organization seeking to operate within regulatory rules.
At the same time, as online technologies have continued to evolve, online learning or ‘eLearning’ has emerged as a cornerstone approach for any financial services organization looking to implement FINRA compliance training. eLearning offers a level of cost-effectiveness, convenience, flexibility, and measurement that classroom-based training simply cannot offer.
LMS Portals and FINRA Rule 2090
LMS Portals provides a cloud-based platform for that allows your organization to launch and manage your own branded eLearning portal for FINRA Rule 2090 and other compliance training efforts. Our system allows for the quick and easy development and deployment of eLearning courses and includes powerful supporting tools for student onboarding, online communications, program measurement, and more.