Match each duty to its regulator: SEC for federal oversight, FINRA for member broker-dealers, Cboe for its exchange members, MSRB for municipal rulemaking, and states for state law.
- SEC: federal oversight.
- FINRA: member broker-dealers.
- Cboe: its exchange members.
- MSRB: municipal rulemaking without its own enforcement.
- State administrators: state securities law.
Match the body to its duty
The SEC is the federal securities regulator. Created by the Securities Exchange Act of 1934, it administers federal securities laws and oversees self-regulatory organizations (SROs). Registration review checks disclosure requirements. Declaring a registration statement effective does not approve the investment’s merits or guarantee that its disclosure is complete and accurate.
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FINRA is an SRO, not a government agency. Its member rules protect investors and the public interest. It admits member broker-dealers, administers representative registration, writes member conduct rules, examines firms and disciplines violations. It operates under SEC oversight. SRO rule changes must follow the SEC filing process; some permitted changes can take effect without prior approval.
FINRA Rule 2010 requires members to observe high standards of commercial honor and just and equitable principles of trade. FINRA also offers dispute resolution. In mediation, a neutral helps the parties negotiate but cannot impose a decision. A signed settlement binds the parties. In arbitration, arbitrators decide the dispute in a final and binding award.
The MSRB writes rules for municipal securities dealers and municipal advisers. It does not examine firms or enforce its rules, and it does not regulate municipal issuers: federal law bars it from requiring an issuer to file documents with it before a sale. The SEC, FINRA and the appropriate federal bank regulators enforce MSRB rules within their jurisdictions. The MSRB also provides market data and education.
State securities administrators enforce state securities laws, often called blue-sky laws. Their work includes licensing firms and agents, registering certain offerings and pursuing fraud. Federal law limits some state registration requirements but preserves state antifraud authority. NASAA is an association of these administrators, rather than the official that licenses an agent in one state.
Investor labels describe different attributes and can overlap. An individual using a broker recommendation for personal, family or household purposes may be a retail customer and also an accredited investor. Accredited status is a category under an offering rule; Rule 501 includes certain institutions such as banks as well as qualifying natural persons. An institutional investor is an investing organization.
Cboe Exchange, Inc. (CBOE) is a national securities exchange and an SRO. It can enforce its exchange rules against its members and associated persons under SEC oversight. Its exchange role differs from FINRA’s member broker-dealer role and the MSRB’s municipal rulemaking role. Exchange enforcement does not remove the SEC’s authority.
Exam terms (12)
- SEC
- The federal agency that administers the securities laws and oversees the SROs.
- Self-regulatory organization
- An industry regulatory body under SEC oversight; exchanges and FINRA enforce member rules, while the MSRB relies on other regulators for enforcement.
- FINRA
- The SRO for broker-dealers; admits member firms, administers representative registration, and examines and disciplines members.
- MSRB
- Writes municipal dealer and adviser rules; other regulators examine and enforce.
- Blue-sky law
- A state’s own securities law, covering registration, licensing and fraud.
- State securities administrator
- The state official who runs blue-sky law within that state.
- Accredited investor
- A person or entity in a category recognized by an offering rule such as SEC Rule 501.
- Institutional investor
- An investing organization; institutional status can overlap with accredited status.
- Mediation
- A voluntary, non-binding negotiation assisted by a neutral; the parties control the outcome.
- Arbitration
- A dispute process in which an arbitrator decides the outcome in a final and binding award.
- Cboe Exchange, Inc. (CBOE)
- A national securities exchange and SRO that can enforce its exchange rules against members under SEC oversight.
- NASAA
- An association of state, provincial and territorial securities administrators; individual administrators enforce their own jurisdiction’s laws.
What the Commission is for
The Commission states a three-part mission: protecting investors, maintaining fair, orderly and efficient markets, and facilitating capital formation. Disclosure and enforcement help investors assess risk. SEC review does not endorse an investment or promise a profit.
The regulator map
- SECFederal regulator; oversees the SROs
- Reviews registration statements
- Brings civil enforcement
- Oversees SRO rule filings
- FINRASRO for broker-dealers
- Writes conduct rules
- Examines member firms
- Fines, suspends and bars
- MSRBMunicipal rulebook only
- Writes dealer and adviser rules
- Does not examine firms
- Does not enforce its rules
- State administratorsBlue-sky law, state by state
- License firms and agents
- Pursue fraud under state law
- Cboe (CBOE)National securities exchange and SRO
- Writes exchange rules
- Enforces rules against exchange members
- Operates under SEC oversight
Try it: Recall the body for each duty: federal securities oversight; member broker-dealer discipline; Cboe exchange-member discipline; municipal rulemaking; state licensing. Then name the bodies that can enforce MSRB rules: the SEC, FINRA and appropriate federal bank regulators.
Check yourself
Try a question, then read the explanation to review the rule.
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Worked example
A municipal securities dealer is accused of breaching an MSRB rule on dealings with a customer, and the question is who acts next.
- Start with the rulebook. The rule the dealer is accused of breaking is an MSRB rule, because the MSRB writes the conduct rules for municipal dealers.
- Now ask who examines and charges. The MSRB has no examination staff and no disciplinary authority, so it cannot bring the case itself.
- Identify the dealer. FINRA examines and disciplines its member broker-dealers. A bank dealer is supervised by the appropriate federal banking regulator.
- The SEC oversees the MSRB and FINRA and can also bring its own federal enforcement action. Writing a municipal rule and enforcing it are separate functions.
- A state administrator can act as well if state antifraud law was broken, which is why the same conduct can attract more than one proceeding.
Same rule, new context
Opening your study record…
Same rule, new context
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The closest contrast
MSRB: rules.
FINRA: rules and enforcement.
For an MSRB rule violation, identify the dealer’s regulator. FINRA supervises its member broker-dealers; the appropriate federal bank regulator supervises bank dealers. The SEC also has enforcement authority.
Summary
- SEC effectiveness does not approve investment merits or guarantee accurate disclosure. The SEC oversees the SROs.
- FINRA writes and enforces member broker-dealer rules. Cboe writes and enforces exchange-member rules.
- The MSRB writes municipal dealer and adviser rules. The SEC, FINRA and appropriate federal bank regulators enforce them.
- State administrators enforce state law; NASAA is their association. Retail, institutional and accredited categories can overlap.
Related practice
- Regulator and participant role mapPractice this
Sources
- SIE Examination Content Outline (2025) · FINRA · checked 2026-10-12
- Mission (US Securities and Exchange Commission) · SEC · checked 2026-09-04
- 15 U.S.C. § 78d — Securities and Exchange Commission (Exchange Act section 4) · US Code · checked 2026-09-04
- 15 U.S.C. § 78o‑3 — Registered securities associations (Exchange Act section 15A) · US Code · checked 2026-09-04
- FINRA Rule 2010 — Standards of Commercial Honor and Principles of Trade · FINRA · checked 2026-09-20
- Mediation Overview (FINRA Dispute Resolution Services) · FINRA · checked 2026-09-04
- 17 CFR 230.501 — Regulation D, definition of accredited investor · SEC · checked 2026-09-20
- Frequently Asked Questions on Regulation Best Interest — Retail Customer · SEC · checked 2026-09-20
- Role and Jurisdiction of the MSRB · MSRB · checked 2026-09-04
- About Us (North American Securities Administrators Association) · NASAA · checked 2026-09-04
- 15 U.S.C. § 78s — Registration, responsibilities, and oversight of self-regulatory organizations (Exchange Act section 19) · US Code · checked 2026-09-04
- Self-Regulatory Organization Rulemaking — national securities exchange directory · SEC · checked 2026-09-27
- Updated Investor Bulletin: Investing in an IPO — selling shareholders · Investor.gov · checked 2026-09-27
- 15 U.S.C. § 77r — Exemption from State regulation of securities offerings (Securities Act section 18) · US Code · checked 2026-09-04
- 15 U.S.C. § 78o-4(d) — Issuance of municipal securities (Exchange Act section 15B(d)) · US Code · checked 2026-10-10