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.