The securities industry is a highly regulated industry. All broker dealers are required to regulate their employees. A broker dealer must designate a principal to supervise all of the actions of the firm and its employees. The broker dealer and all of its employees are also regulated by an SRO (Self Regulatory Agency), such as FINRA or the NYSE. The SRO’s and all industry participants answer to the SEC. The SEC is the ultimate securities industry authority. Additionally, each state has adopted their own rules and regulations regarding securities transactions within their state. Violations of industry regulations may lead to fines and expulsion from the industry. Violations of state and federal laws may result in fines, expulsion from the state or industry, or a jail term. Industry participants are expected to adhere to all of the industry’s rules and regulations, as well as all state and federal laws.



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