> they are telling the government that government regulation isn't needed — they can regulate themselves

Quite a "trustworthy" regulation entity, which helped brokers remove evidence of financial misconducts and blocked public scrutiny into that matter.[0][1]

I have close to zero confidence in the finance industry being able to regulate itself.

[0] https://www.reuters.com/investigates/special-report/usa-finr... [1] https://www.sciencedirect.com/science/article/abs/pii/S03044...

They are indeed not a government regulator but, in practice, Federal law does require membership in FINRA for broker-dealers.

See for instance: https://www.law.cornell.edu/cfr/text/17/240.15b7-1

FINRA is the only national securities association.

But if it’s not government, why would anyone ever pay fines to them then?

Quite simple. The government legislates that membership in a non-government entity is required to do business in a sector.

If you’re fined and don’t pay the fine to the entity, they revoke the membership and you are now breaking the law.

Which begs the question; why can't you just ignore the fine, rebrand under a new name (including changing leadership) and then apply for new membership?

What is keeping FINRA's interest in following up with punishments of members?

What's stopping you is they wouldn't give you membership when you reapply.

You can have your ability to deal in the financial markets removed for a bunch of things but in particular any sort of official sanction for dishonesty or fraud. There was a senior portfolio manager at Blackrock who was banned from the securities industry for ticket fraud on his daily commute (albeit over a number of years). https://www.theguardian.com/business/2014/dec/15/ca-ban-4300...

This is why I asked the second question. If FINRA has no obligation to enforce its punishments, but doesn't want to deal with the fallout of the same company with the same name and leadership reapplying for membership, then how do they get around that? Force the company to change name, change executives and reapply in 6 months. it all blows over, FINRA gets their membership fees and everybody is none the wiser.

But yes, in an ideal world it wouldn't work this way. who watches the watchmen? If FINRA isn't regulated, then they can do what they like.

Why would you think FINRA has no interest in enforcing it's punishments? If they didn't enforce their punishments then they wouldn't have any authority over their members, so I expect they want to have opportunities to enforce punishments.

The whole point is everybody involved plays fair and follows the rules so they dont have a government agency come in and regulate them.

Every "self-regulatory organization" exists with the implicit threat that the government can and will impose external regulations if the organization doesn't do a good job. FINRA is authorized by law because lawmakers believe it does a good job of regulation, and that law continues to exist only because lawmakers continue to believe that. The SEC watches what FINRA does, and the government could easily choose to stop authorizing FINRA and assign its duties to the SEC.

In fact, FINRA itself was only established in 2007; the previous self-regulatory organization was the National Association of Securities Dealers, NASD - you may have heard of their Automated Quotation service, NASDAQ. FINRA was created after a long period of the SEC criticizing NASD for prioritizing the good of its business over effective self-regulation (see e.g. https://www.washingtonpost.com/archive/business/1994/11/15/s... and https://apnews.com/article/2d710b55afae651b8ad0737477ba2d79).

What's stopping you from declaring bankruptcy to invalidate all of your outstanding debt?

Depends on the type of debt and whether you're actually bancrupt.

Is this real or are you joking?

It's definitely a thing: https://en.wikipedia.org/wiki/Quango

It's the same with many things. Lawyers, doctors, etc.

This comes from a long line of trade houses, literally spanning back 1000s of years. Trades have regulated themselves since before governments existed.

> Trades have regulated themselves since before governments existed.

Not even remotely. Guilds followed states, and were usually under the purview of and regulated by cities.

The guilds were the power brokers that defined the cities, at least in Europe guilds defined city policy not the other way around.

That guilds were powerful and could corrupt city leadership has nothing to do with my comments.

And artisan guilds predate medieval europe by thousands of years.

The guilds and later trading families were the city leadership.

In the city I was born which was founded around 2000 years ago and got it's first major in the 14th century, most of the majors back then there were guild masters (the city only later become a trading point).

The city I currently live in got it's first major in the 13th century who was also a guild master.

The first trade to regulate itself did not use a guild. For example, have you heard of the Hippocratic oath? It’s still required in the USA and includes quite a few interesting tidbits that wouldn’t get past a modern ethicist.

I swear by Apollo Healer, by Asclepius, by Hygieia, by Panacea, and by all the gods and goddesses, making them my witnesses, that I will carry out, according to my ability and judgment, this oath and this indenture.

To hold my teacher in this art equal to my own parents; to make him partner in my livelihood; when he is in need of money to share mine with him; to consider his family as my own brothers, and to teach them this art, if they want to learn it, without fee or indenture; to impart precept, oral instruction, and all other instruction to my own sons, the sons of my teacher, and to indentured pupils who have taken the Healer’s oath, but to nobody else.

I will use those dietary regimens which will benefit my patients according to my greatest ability and judgment, and I will do no harm or injustice to them.[7] Neither will I administer a poison to anybody when asked to do so, nor will I suggest such a course. Similarly I will not give to a woman a pessary to cause abortion. But I will keep pure and holy both my life and my art. I will not use the knife, not even, verily, on sufferers from stone, but I will give place to such as are craftsmen therein.

Into whatsoever houses I enter, I will enter to help the sick, and I will abstain from all intentional wrong-doing and harm, especially from abusing the bodies of man or woman, bond or free. And whatsoever I shall see or hear in the course of my profession, as well as outside my profession in my intercourse with men, if it be what should not be published abroad, I will never divulge, holding such things to be holy secrets.

Now if I carry out this oath, and break it not, may I gain for ever reputation among all men for my life and for my art; but if I break it and forswear myself, may the opposite befall me.[6] – Translation by W.H.S. Jones.

The Hippocratic oath is not required in the US, and many schools that do use it have significantly modified it. Eg:

> In a 2000 survey of US medical schools, all of the then extant medical schools administered some type of profession oath. Among schools of modern medicine, sixty-two of 122 used the Hippocratic Oath, or a modified version of it. The other sixty schools used the original or modified Declaration of Geneva, Oath of Maimonides, or an oath authored by students and or faculty. All nineteen osteopathic schools used the Osteopathic Oath.

https://en.m.wikipedia.org/wiki/Hippocratic_Oath

Some schools still use a modified version, but I could’ve been way more clear about that. You’re right.

The point I was trying to make was that guilds were not the first form of trades self regulating.

> The first trade to regulate itself did not use a guild. For example, have you heard of the Hippocratic oath?

1. How is that of any relevance to my comment?

2. Are you somehow ahistorically asserting that medecine was the first trade to regulate itself?

No, I was just making the point that guilds were not the first form of trades self regulating.

I this the idea of regylation was very different back then, after all we could build towers with woodn fire escaoes as recently as 1850's

Not sure why you are downvoted. It's not quite the same, but the American Medical Association has direct input into how much doctors are paid by Medicare, how many residency positions there are, etc. Those are all government programs.

Assassin's Guide, Theives Guild, etc

I'm quite niave in the ways and make up of financial instituations. But from what I can tell - many of the US regulatory bodies seems to be private (but not ostensibly for profit) companies.

Infact the US Federal Reserve is not a government entity - its a private (and public somehow).

https://www.stlouisfed.org/in-plain-english/who-owns-the-fed...

This contrasts (as far as I can tell) with Australia, where the central bank is 100% state-owned.

Because these JPMorgans of the world don't want the Govt to step in to the market and regulate it. This is group of brokerages and they want to be free.

These fines are to calm down govt and fk robin hood same time.