2019-11-15T12:31:01-06:00 2018-12-31 ERNST & YOUNG US LLP 221 E 4TH STREET SUITE 2900 CINCINNATI OH 45202 990 2018-01-01 521959501 FINRA REGULATION INC % MARCIA E ASQUITH FINR 2027288949 1735 K STREET NW WASHINGTON DC 200061506 ROBERT A RENNER VICE PRESIDENT 2403865303 2019-11-14 true JULIE L SPARKS P01268401 5136121400 190.247.210.75 86597020193195000024 2019-11-15 P 34163F381DEDE5EE0CABDD6E8F3BD042227F3C04 5BBAE5511E2DD1F7FEB97130453AA58C07BF2DC6 2018 2020-04-17 16:48:07Z ROBERT W COOK 1735 K STREET NW WASHINGTON DC 200061506 818795285 false X WWW.FINRA.ORG X 1996 DE FINRA REGULATION IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. 14 13 0 1 33350 12795 0 0 791969260 818670022 0 0 164352 125263 792133612 818795285 577521 1083953 0 0 0 0 0 0 0 662732918 663371547 663310439 664455500 128823173 154339785 58676126 49311804 149766984 151407763 -91090858 -102095959 X FINRA REGULATION IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. false false SEE SCHEDULE O false false false false false false false false false false false false false false true false true false false false false false false false false false true false true false false false false false false false false false false false true false false true X 0 0 0 true true false false false false false true false X 14 13 false false false false true true true true true false false true true true true true true false false false CA X MARCIA E ASQUITH 2027288949 1735 K STREET NW WASHINGTON DC 20006 X ELISSE B WALTER CHAIR, REG POLICY COMMITTEE 3.0 5.0 X 0 91530 0 STEPHEN M CUTLER - THRU 318 REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 0 0 JOHN B EHNES - AS OF 818 REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 42665 0 WILLIAM H HEYMAN REGULATORY POLICY COMMITTEE 2.0 3.0 X 0 118684 0 SUSAN WOLBURGH JENAH REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 90859 0 STEPHAN A KOHN REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 83128 0 BRIAN J KOVACK REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 82734 0 JOSHUA S LEVINE REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 85559 0 BRIGITTE C MADRIAN REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 82734 0 ROBERT A MUH REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 85338 0 KATHLEEN A MURPHY REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 90694 0 JOSEPH RV ROMANO - THRU 818 REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 60760 0 HILLARY A SALE REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 83664 0 TIMOTHY C SCHEVE - AS OF 418 REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 42665 0 LESLIE F SEIDMAN REGULATORY POLICY COMMITTEE 2.0 2.0 X 0 98684 0 ROBERT W COOK PRESIDENT & CEO 60.0 0.0 X X 0 2358157 522215 TODD T DIGANCI EXECUTIVE VICE PRESIDENT/CFAO 60.0 0.0 X 0 1424690 149244 MARCIA A ASQUITH EVP, BOARD & EXTERNAL RELATIOS 60.0 0.0 X 0 750633 149415 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 60.0 0.0 X 0 2350790 26111 RICHARD W BERRY EXECUTIVE VICE PRESIDENT 60.0 0.0 X 0 803556 52983 ROBERT L D COLBY EVP AND CHIEF LEGAL OFFICER 60.0 0.0 X 0 1047722 74967 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 60.0 0.0 X 0 866165 57515 BARI M HAVLIK - AS OF 918 EXECUTIVE VICE PRESIDENT 60.0 0.0 X 0 492135 55544 SUSAN M SCHROEDER - AS OF 918 EXECUTIVE VICE PRESIDENT 60.0 0.0 X 0 806717 158621 CARLO DI FLORIO EXECUTIVE VICE PRESIDENT 0.0 60.0 X 0 667983 175648 TRACY B JOHNSON SENIOR VICE PRESIDENT 0.0 60.0 X 0 591174 100911 DEREK W LINDEN EXECUTIVE VICE PRESIDENT 0.0 60.0 X 0 665934 42042 STEVEN J RANDICH EXECUTIVE VICE PRESIDENT & CIO 0.0 60.0 X 0 1379073 171260 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 0.0 60.0 X 0 639452 77481 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 0.0 60.0 X 0 673162 41935 JONATHAN S SOKOBIN SENIOR VICE PRESIDENT 0.0 60.0 X 0 533177 133775 0 17190218 1989667 0 true true false FINANCIAL INDUSTRY REGULATORY AUTHO 1735 K STREET NW WASHINGTON DC 20006 CONSULTING/EMPLOYEE 458340793 1 0 REGULATORY FEES 900099 468308630 468308630 USER FEES 900099 179882071 179848721 33350 FINES 900099 60951502 60951502 CONTRACT SERVICE FEES 900099 70274144 70274144 DISPUTE RESOLUTION FEES 900099 39133765 39133765 119910 119910 818670022 0 0 125263 125263 0 0 0 0 0 0 0 0 0 0 0 0 0 0 818795285 818636672 33350 125263 1083953 0 0 0 0 0 0 0 0 0 458340793 813965 118207 0 0 0 25647108 83225 2564512 4371853 0 38942498 9402037 0 5293827 0 0 0 0 OVERHEAD ALLOCATION 110742583 BAD DEBT 3725214 TEMPORARY HELP 2898017 PUBLICATIONS/PRINTING 306903 120805 664455500 0 0 0 0 0 0 58676126 49311804 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 58676126 49311804 70948517 71709302 0 0 78818467 79698461 0 0 0 0 0 0 0 0 0 0 0 0 149766984 151407763 X 12592800 12592800 50000000 50000000 -153683658 -164688759 -91090858 -102095959 58676126 49311804 X 154339785 -165344886 X false true X true false 0 0 X SCHEDULE D, PART X, LINE 2 ASC 740 FOOTNOTE FROM CONSOLIDATED AUDITED FINANCIAL STATEMENTS U.S. GAAP PROVIDES A TWO-STEP APPROACH FOR EVALUATING TAX POSITIONS. RECOGNITION (STEP 1) OCCURS WHEN AN ENTITY CONCLUDES THAT A TAX POSITION, BASED SOLELY ON ITS TECHNICAL MERITS, IS MORE LIKELY THAN NOT TO BE SUSTAINED UPON EXAMINATION. MEASUREMENT (STEP 2) OCCURS WHEN THE TAX BENEFIT IS MEASURED AS THE LARGEST AMOUNT OF BENEFIT, DETERMINED ON A CUMULATIVE PROBABILITY BASIS, THAT IS MORE LIKELY THAN NOT TO BE REALIZED UPON ULTIMATE SETTLEMENT. FROM 2015 THROUGH 2018, THE YEARS MANAGEMENT CONSIDERS TO BE OPEN FOR EXAMINATION BY TAXING AUTHORITIES, MANAGEMENT DID NOT IDENTIFY THE EXISTENCE OF ANY UNCERTAIN TAX POSITIONS. true AMERICAN ONLINE GIVING 200 MAIN ST SAFETY HARBOR FL 34695 810739440 501(C)(3) 168507 GENERAL SUPPORT CONSUMER FEDERATION OF AMERICA 1620 EYE STREET WASHINGTON DC 20006 520880625 501(C)(3) 16000 GENERAL SUPPORT COUNCIL FOR ECONOMIC EDUCATION 122 EAST 42ND STREET NEW YORK NY 10168 131623848 501(C)(3) 15000 GENERAL SUPPORT EMPLOYEE BENEFIT RESEARCH INSTITUTE 1100 13TH STREET WASHINGTON DC 20005 200863779 501(C)(6) 9000 GENERAL SUPPORT FINRA INVESTOR EDUCATION FOUNDATION INC 1735 K STREET NW WASHINGTON DC 20006 200863779 501(C)(4) 772946 GENERAL SUPPORT GEORGETOWN UNIVERSITY 111 G STREET NW WASHINGTON DC 20001 530196603 501(C)(3) 10000 GENERAL SUPPORT HASTINGS GROUP LLC 2424 N 16TH ST ARLINGTON VA 22201 954378084 501(C)(3) 10000 GENERAL SUPPORT JUMPSTART COALITION 919 18TH STREET NW WASHINGTON DC 20006 522031287 501(C)(3) 15000 GENERAL SUPPORT SEC HISTORICAL SOCIETY 1001 PENN AVE WASHINGTON DC 20004 522213646 501(C)(3) 20000 GENERAL SUPPORT SIFMA FOUNDATION FOR INVESTOR EDUCATION 120 BROADWAY NEW YORK NY 10271 521087193 501(C)(3) 30000 GENERAL SUPPORT UNIVERSITY OF PENNSYLVANIA 3254 STEINBERG HALL PHILADELPHIA PA 19104 231352685 501(C)(3) 10000 GENERAL SUPPORT 9 2 Form 990, Schedule I VOLUNTARY DISCLOSURE FOR THE SIFMA FOUNDATION FOR INVESTOR EDUCATION CONTRIBUTION DURING 2018: TODD T. DIGANCI, FINRA AND FINRA REGULATION EXECUTIVE VICE PRESIDENT & CFAO, SERVED AS A BOARD MEMBER OF THE SIFMA FOUNDATION FOR INVESTOR EDUCATION. THE DONATIONS MADE TO AMERICAN ONLINE GIVING REPRESENTS THE EMPLOYER MATCH FOR FINRA'S WORKPLACE GIVING CAMPAIGN. FINRA REGULATION, INC. CONTRIBUTED DISGORGEMENT AWARDS RESULTING FROM REGULATORY FINES TO THE FINRA INVESTOR EDUCATION FOUNDATION. THESE DISGORGEMENTS, IN THE AMOUNT OF $772,946 WERE EARMARKED BY FINRA REGULATION, INC. FOR THE INVESTOR EDUCATION FOUNDATION (THE FOUNDATION), FOR PROGRAMS AND PROJECTS CONSISTENT WITH THE FOUNDATION'S MISSION. THE FOUNDATION IS A TAX-EXEMPT ORGANIZATION UNDER SECTION 501(C)(4) AND ITS MISSION IS TO PROVIDE UNDERSERVED AMERICANS WITH THE KNOWLEDGE, SKILLS AND TOOLS NECESSARY FOR FINANCIAL SUCCESS. THE FINRA INVESTOR EDUCATION FOUNDATION BOARD IS RESPONSIBLE FOR APPROVING AND MONITORING GRANTS. SEE THE FOUNDATION'S FORM 990 FOR ADDITIONAL DETAILS ON THE GRANT APPROVAL AND MONITORING PROCESS. FORM 990, SCHEDULE I, PART I, LINE 2 OVERSIGHT AND RECORDKEEPING OF CONTRIBUTIONS CHARITABLE CONTRIBUTIONS ARE REVIEWED AND APPROVED BY THE APPROPRIATE BUSINESS UNIT HEAD (OR THEIR DESIGNEE). THE ORGANIZATION MAINTAINS RECORDS TO SUBSTANTIATE THE AMOUNT AND THE PURPOSE OF THE CHARITABLE CONTRIBUTIONS. true true false ROBERT W COOK PRESIDENT & CEO 0 981342 0 1350000 0 26815 0 520268 0 1947 0 2880372 0 0 TODD T DIGANCI EXECUTIVE VICE PRESIDENT/CFAO 0 574276 0 625500 0 224914 0 122750 0 26494 0 1573934 0 180556 MARCIA A ASQUITH EVP, BOARD & EXTERNAL RELATIOS 0 340953 0 370000 0 39680 0 115437 0 33978 0 900048 0 0 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 0 142778 0 542500 0 1665512 0 9865 0 16246 0 2376901 0 1556228 RICHARD W BERRY EXECUTIVE VICE PRESIDENT 0 289407 0 271800 0 242349 0 16500 0 36483 0 856539 0 135580 ROBERT L D COLBY EVP AND CHIEF LEGAL OFFICER 0 475888 0 441000 0 130834 0 35750 0 39217 0 1122689 0 0 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 0 442244 0 418500 0 5421 0 16500 0 41015 0 923680 0 0 BARI M HAVLIK - AS OF 918 EXECUTIVE VICE PRESIDENT 0 297778 0 0 0 194357 0 35750 0 19794 0 547679 0 0 SUSAN M SCHROEDER - AS OF 918 EXECUTIVE VICE PRESIDENT 0 385739 0 400000 0 20978 0 118788 0 39833 0 965338 0 0 CARLO DI FLORIO EXECUTIVE VICE PRESIDENT 0 416107 0 230000 0 21876 0 114252 0 61396 0 843631 0 0 TRACY B JOHNSON SENIOR VICE PRESIDENT 0 312889 0 258000 0 20285 0 87710 0 13201 0 692085 0 0 DEREK W LINDEN EXECUTIVE VICE PRESIDENT 0 342943 0 311000 0 11991 0 16500 0 25542 0 707976 0 0 STEVEN J RANDICH EXECUTIVE VICE PRESIDENT & CIO 0 473619 0 527000 0 378454 0 134380 0 36880 0 1550333 0 218945 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 0 325471 0 235000 0 78981 0 38705 0 38776 0 716933 0 0 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 0 335960 0 312300 0 24902 0 16500 0 25435 0 715097 0 0 JONATHAN S SOKOBIN SENIOR VICE PRESIDENT 0 291406 0 220000 0 21771 0 84919 0 48856 0 666952 0 0 SCHEDULE J, PART I, LINE 4A & 4B FINRA REGULATION, INC. IS A WHOLLY-CONTROLLED SUBSIDIARY OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA). AS THE PARENT ORGANIZATION, FINRA INCURS ALL DIRECT AND INDIRECT EXPENSES, INCLUDING SALARY AND BENEFITS. LINE 4A) IN CONNECTION WITH SUSAN F. AXELROD'S SEPARATION FROM FINRA, SHE WAS PAID $1,665,512 IN 2018, OF WHICH $1,556,228 WAS DEFERRED AND REPORTED IN 2017. THIS PAYMENT IS REFLECTIVE OF HER 28 YEARS OF SERVICE AT BOTH THE NEW YORK STOCK EXCHANGE AND FINRA. LINE 4B) FINRA OFFERS TWO NON-QUALIFIED SUPPLEMENTAL EXECUTIVE RETIREMENT PLANS. ANNUAL INCREASES IN BENEFIT VALUE, CLIFF VESTING EVENTS, AND PAYOUT DIFFERENTIALS ARE TAXABLE IN THE YEAR IN WHICH THEY OCCUR AND ARE REPORTED IN COLUMN B(III) OF SCHEDULE J, PART II. UNVESTED BENEFIT AND CONTRIBUTION ACCRUALS ARE TAX DEFERRED AND ARE REPORTED IN COLUMN C OF SCHEDULE J, PART II. 1) FINRA'S SUPPLEMENTAL DEFINED BENEFIT PLAN IS A NON-QUALIFIED DEFINED BENEFIT PLAN THAT IS PROVIDED TO MEMBERS OF A SELECT GROUP OF MANAGEMENT OR HIGHLY COMPENSATED EMPLOYEES SUCH AS THOSE DESCRIBED UNDER 201(2), 301(A)(3), AND 401(A)(1) OF ERISA. IT IS A FINRA FUNDED PLAN IN WHICH PARTICIPANTS TYPICALLY HAD A TAXABLE ONE-TIME CLIFF VESTING EVENT AT A SPECIFIED MILESTONE BASED ON BOTH AGE AND YEARS OF SERVICE. THIS PLAN WAS CLOSED TO NEW ENTRANTS AS OF 12/31/05. ALL PARTICIPANTS HAVE COMPLETED VESTING. THE AMOUNTS BELOW REPRESENT THE ACCUMULATED BENEFITS RECOGNIZED IN THE CURRENT YEAR FOR FEDERAL INCOME TAX PURPOSES UPON THE INDIVIDUALS' SEPARATION FROM FINRA AND THE PLAN. THE BENEFITS WERE EARNED WITHIN THE NON-QUALIFIED DEFINED BENEFIT PLAN OVER THE DURATION OF THE INDIVIDUALS' YEARS OF SERVICE TO FINRA. THESE AMOUNTS VARY BY INDIVIDUAL BASED ON YEARS OF SERVICE, COMPENSATION LEVELS AND PAY GRADE, AGE AT SEPARATION, AND PREVIOUS VESTING EVENTS. NO PARTICIPANTS IN THE NON-QUALIFIED DEFINED BENEFIT PLAN HAD ACCUMULATED BENEFITS RECOGNIZED IN 2018. DECREASES IN THE ACTUARIAL VALUE OF CERTAIN EMPLOYEES' DEFINED BENEFIT PLANS ARE REPORTED BELOW. THESE AMOUNTS ARE EXCLUDED FROM DEFERRED COMPENSATION AMOUNTS IN SCHEDULE J, COLUMN C IN ORDER TO AVOID DISTORTION OF TOTAL COMPENSATION. PARTICIPANTS IN FINRA'S NON-QUALIFIED SUPLEMENTAL EXECUTIVE RETIREMENT PLAN WHO HAD A DECREASE IN ACTUARIAL VALUE IN 2018 INCLUDE: TODD T. DIGANCI - ($178,943) THOMAS R. GIRA - ($126,952) DEREK W. LINDEN - ($309,735) THOMAS M. SELMAN - ($270,129) PARTICIPANTS IN FINRA'S EMPLOYEE RETIREMENT PLAN WHO HAD A DECREASE IN ACTUARIAL VALUE IN 2018 INCLUDED: MARCIA E. ASQUITH - ($62,142) SUSAN F. AXELROD - ($58,465) RICHARD W. BERRY - ($38,543) TODD T. DIGANCI - ($61,120) THOMAS R. GIRA - ($75,288) DEREK W. LINDEN - ($33,211) THOMAS M. SELMAN - ($44,230) 2) FINRA'S SUPPLEMENTAL DEFINED CONTRIBUTION PLAN IS A NON-QUALIFIED PLAN THAT IS OPEN TO VICE PRESIDENTS AND ABOVE WITH AN ANNUAL BASE PAY ABOVE THE QUALIFIED LIMIT. IT IS ONLY OPEN TO THOSE NOT PARTICIPATING IN THE CLOSED NON-QUALIFIED DEFINED BENEFIT PLAN DESCRIBED ABOVE. IT IS A FINRA FUNDED PLAN WITH A 3 YEAR VESTING CYCLE WITH ANNUAL VESTING BEGINNING AT AGE 62. PARTICIPANTS IN THE SUPPLEMENTAL NON-QUALIFIED DEFINED CONTRIBUTION PLAN WITH CONTRIBUTIONS VESTING IN 2018 INCLUDE: SUSAN F. AXELROD - $184,676 RICHARD W. BERRY - $220,953 ROBERT L. D. COLBY - $103,525 STEPHEN J. RANDICH - $353,852 STEPHEN M. SCHOENEMAN - $54,169 VOLUNTARY COMPENSATION DISCLOSURE: STEPHEN CUTLER WAS A VOLUNTEER BOARD MEMBER IN 2018 AND DID NOT RECEIVE COMPENSATION FOR HIS SERVICE. VOLUNTARY DISCLOSURE FOR FINANCIAL INFORMATION FINRA REGULATION, INC. IS A WHOLLY-CONTROLLED SUBSIDIARY OF THE FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA). AS THE PARENT ORGANIZATION, FINRA INCURS ALL DIRECT AND INDIRECT EXPENSES, INCLUDING SALARY AND BENEFITS. THE FINANCIAL INFORMATION INCLUDED IN THIS FORM 990 IS PRESENTED ON A STAND-ALONE BASIS, REFLECTING ONLY THOSE AMOUNTS ALIGNED WITH THE PROGRAMS CONDUCTED UNDER THE GOVERNANCE OF THE FINRA REGULATION BOARD OF DIRECTORS. THE STATEMENTS AND SCHEDULES IN THIS FORM 990 DO NOT REPRESENT THE CONSOLIDATED RESULTS FOR FINRA AND ITS SUBSIDIARIES. THE 2018 FORM 990 SHOULD BE READ IN CONJUNCTION WITH FINRA'S 2018 ANNUAL FINANCIAL REPORT, WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS. SEE ALSO SEPARATE 2018 FORMS 990 FOR RELATED ENTITIES INCLUDING FINRA AND FINRA INVESTOR EDUCATION FOUNDATION. FORM 990, PART III, LINE 4 4A) MARKET REGULATION FINRA REGULATION'S MARKET REGULATION DEPARTMENT OVERSEES AND REGULATES OVER-THE-COUNTER TRADING OF EXCHANGE-LISTED AND NON-EXCHANGE-LISTED SECURITIES, CORPORATE AND MUNICIPAL DEBT, ASSET-BACKED SECURITIES AND TREASURY SECURITIES FOR COMPLIANCE WITH FINRA AND MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) RULES AND FEDERAL SECURITIES LAWS. MARKET REGULATION ALSO PROVIDES REGULATORY SERVICES TO THE CBOE, ISE, MIAX, NASDAQ AND NYSE EXCHANGE GROUPS, AS WELL AS THE BOX OPTIONS EXCHANGE AND THE INVESTORS EXCHANGE. IN 2018, MARKET REGULATION OPENED 5,016 REVIEWS OR INVESTIGATIONS AND 272 EXAMINATIONS. IN ADDITION, THE DEPARTMENT REFERRED 728 MATTERS TO THE SECURITIES AND EXCHANGE COMMISSION. 4B) MEMBER SUPERVISION FINRA REGULATION'S MEMBER SUPERVISION DEPARTMENT CONDUCTS REGULAR AND BRANCH OFFICE EXAMINATIONS OF ITS MEMBER FIRMS ON A SCHEDULE THAT IS ESTABLISHED BASED ON A RISK-PROFILE MODEL. IN ADDITION, MEMBER SUPERVISION CONDUCTS REVIEWS AND TARGETED EXAMINATIONS BASED ON INVESTOR COMPLAINTS, REFERRALS FROM OTHER FINRA REGULATION DEPARTMENTS, TERMINATIONS OF BROKERAGE EMPLOYEES FOR CAUSE, ARBITRATIONS AND REFERRALS FROM OTHER REGULATORS. MEMBER REGULATION ALSO DETERMINES EXAMINATION PRIORITIES AND CONDUCTS SPECIAL "SWEEPS" OF ITS MEMBER FIRMS TO TARGET ISSUES OF IMMEDIATE CONCERN. IN 2018, MEMBER SUPERVISION CONDUCTED MORE TAHN 6,300 EXAMINATIONS. 4C) ENFORCEMENT FINRA REGULATION DISCIPLINES SECURITIES FIRMS AND INDIVIDUALS IN THE SECURITIES INDUSTRY WHO VIOLATE THE FEDERAL SECURITIES LAWS AND RULES AS WELL AS FINRA AND MUNICIPAL SECURITIES RULEMAKING BOARD (MSRB) RULES. THROUGH ITS ENFORCEMENT DEPARTMENT, FINRA REGULATION BRINGS DISCIPLINARY ACTIONS AGAINST FIRMS AND THEIR EMPLOYEES THAT MAY RESULT IN SANCTIONS, INCLUDING CENSURES, FINES, SUSPENSIONS AND, IN EGREGIOUS CASES, EXPULSIONS OR BARS FROM THE INDUSTRY. IN APPROPRIATE CASES, FINRA REGULATION WILL REQUIRE FIRMS AND INDIVIDUALS TO PROVIDE RESTITUTION TO HARMED INVESTORS AND OFTEN IMPOSES OTHER CONDITIONS ON A FIRM'S BUSINESS TO PREVENT REPEATED WRONGDOING. IN 2018, FINRA REGULATION BROUGHT MORE THAN 900 NEW DISCIPLINARY ACTIONS AGAINST REGISTERED INDIVIDUALS AND FIRMS, LEVIED FINES TOTALING MORE THAN $61.0 MILLION AND ORDERED $25.5 MILLION IN RESTITUTION TO HARMED INVESTORS. IN ADDITION, FINRA REGULATION EXPELLED 16 FIRMS FROM THE SECURITIES INDUSTRY, BARRED 386 INDIVIDUALS AND SUSPENDED 472 BROKERS FROM ASSOCIATION WITH FINRA-REGULATED FIRMS. 4D) OFFICE OF FRAUD DETECTION AND MARKET INTELLIGENCE FINRA REGULATION'S OFFICE OF FRAUD DETECTION AND MARKET INTELLIGENCE (OFDMI) PROVIDES A HEIGHTENED AND EXPEDITED REVIEW OF ALLEGATIONS OF SERIOUS FRAUD, SERVES AS A CENTRAL POINT OF CONTACT INTERNALLY AND EXTERNALLY ON FRAUD-RELATED ISSUES, AND CONSOLIDATES RECOGNIZED EXPERTISE IN EXPEDITED FRAUD DETECTION AND INVESTIGATION. THIS DEPARTMENT IS RESPONSIBLE FOR CONDUCTING CONSOLIDATED SURVEILLANCE OF POTENTIAL INSIDER-TRADING ACROSS ALL U.S. MARKETS AS WELL AS CONDUCTING SURVEILLANCE OF LISTED AND OVER-THE-COUNTER SECURITIES FOR POTENTIAL FRAUDULENT ACTIVITY. THE DEPARTMENT ALSO HOUSES THE CENTRAL REVIEW GROUP, WHICH IS RESPONSIBLE FOR THE TRIAGE REVIEW OF TIPS, COMPLAINTS AND BROKER-DEALER FILINGS. IN ADDITION, OFDMI OVERSEES FINRA'S WHISTLEBLOWER PROGRAM. IN 2018, THE CENTRAL REVIEW GROUP REVIEWED OVER 24,000 MEMBER FIRM FILINGS, COMPLAINTS, TIPS AND ARBITRATION-RELATED MATTERS FOR POTENTIAL FRAUD. IN 2018, THE INSIDER TRADING SURVEILLANCE, FRAUD SURVEILLANCE, WHISTLEBLOWER AND CENTRAL REVIEW GROUP CONDUCTED INVESTIGATIONS THAT RESULTED IN MORE THAN 875 REFERRALS TO THE SEC, OTHER FOREIGN, FEDERAL OR STATE REGULATORY OR LAW ENFORCEMENT AGENCIES, OR OTHER INTERNAL FINRA DEPARTMENTS. THESE REFERRALS INVOLVED POTENTIAL FRAUDULENT CONDUCT INCLUDING INSIDER TRADING, MICROCAP FRAUD SCHEMES, ISSUER FRAUD, THEFT BY PERSONS OUTSIDE FINRA'S JURISDICTION, PONZI-TYPE SCHEMES, AND OTHER POTENTIAL VIOLATIONS OF FEDERAL SECURITIES LAWS, STATE SECURITIES REGULATIONS OR FINRA RULES. 4E) REGISTRATION AND DISCLOSURE ANY PERSON ENGAGED IN THE SECURITIES BUSINESS OF A FIRM, INCLUDING PARTNERS, OFFICERS, DIRECTORS, BRANCH MANAGERS, DEPARTMENT SUPERVISORS AND SALESPERSONS MUST REGISTER WITH FINRA. THROUGH ITS REGISTRATION AND DISCLOSURE DEPARTMENT, FINRA REGULATION OPERATES CRD, THE CENTRAL LICENSING AND REGISTRATION SYSTEM FOR THE U.S. SECURITIES INDUSTRY AND ITS REGULATORS. FINRA REGULATION ALSO OPERATES THE INVESTMENT ADVISER REGISTRATION DEPOSITORY ON BEHALF OF THE SEC. THESE SYSTEMS CONTAIN THE REGISTRATION RECORDS OF MORE THAN 3,600 FINRA AND OTHER REGISTERED BROKER-DEALERS AND MORE THAN 31,000 INVESTMENT ADVISERS, AS WELL AS THE QUALIFICATION, EMPLOYMENT, AND DISCLOSURE HISTORIES OF MORE THAN 625,000 ACTIVE REGISTERED INDIVIDUALS. FINRA REGULATION ALSO OPERATES THE BROKERCHECK PROGRAM, AN ONLINE SYSTEM FOR INVESTORS TO REVIEW THE BACKGROUNDS OF INVESTMENT PROFESSIONALS. BROKERCHECK CONTAINS RECORDS ON 1.2 MILLION CURRENT AND FORMER BROKERS AND OVER 25,000 CURRENT AND FORMER BROKER-DEALERS. 4F) OFFICE OF DISPUTE RESOLUTION FINRA REGULATION'S OFFICE OF DISPUTE RESOLUTION OPERATES A DISPUTE RESOLUTION FORUM FOR INVESTORS, BROKERAGE FIRMS AND THEIR REGISTERED EMPLOYEES, AND ADMINISTERS ARBITRATIONS AND MEDIATIONS THROUGH A NETWORK OF FOUR REGIONAL OFFICES, WITH 71 HEARING LOCATIONS INCLUDING ONE IN EACH STATE AND PUERTO RICO. IN 2018, THE OFFICE OF DISPUTE RESOLUTION ADMINISTERED 4,325 ARBITRATIONS AND 509 MEDIATIONS. FORM 990, PART VI, LINE 6 FINRA IS THE SOLE NOT-FOR-PROFIT STOCKHOLDER OF FINRA REGULATION, INC. FORM 990, PART VI, LINE 7A FINRA, THE SOLE NOT-FOR-PROFIT STOCKHOLDER, ELECTS ALL MEMBERS OF THE GOVERNING BODY. FORM 990, PART VI, LINE 7B FINRA, THE SOLE NOT-FOR-PROFIT STOCKHOLDER, RETAINS THE FOLLOWING AUTHORITY AND FUNCTIONS: 1) TO EXERCISE OVERALL RESPONSIBILITY FOR ENSURING THAT THE ASSOCIATION'S STATUTORY AND SELF-REGULATORY OBLIGATIONS AND FUNCTIONS ARE FULFILLED 2) TO DELEGATE AUTHORITY TO THE SUBSIDIARIES TO TAKE ACTIONS ON BEHALF OF THE ASSOCIATION. 3) TO ELECT THE SUBSIDIARY BOARDS OF DIRECTORS. 4) TO REVIEW THE RULEMAKING AND DISCIPLINARY DECISIONS OF THE SUBSIDIARIES 5) TO COORDINATE ACTIONS OF THE SUBSIDIARY BOARDS AS NECESSARY. 6) TO RESOLVE ANY DISPUTES AMONG THE SUBSIDIARIES. 7) TO ADMINISTER COMMON OVERHEAD AND TECHNOLOGY OF THE SUBSIDIARIES. 8) TO ADMINISTER THE OFFICE OF INTERNAL REVIEW AS PROVIDED IN THE ASSOCIATION'S BY-LAWS. 9) TO MANAGE EXTERNAL ASSOCIATION RELATIONS ON MAJOR POLICY ISSUES. 10) TO DIRECT THE SUBSIDIARIES TO TAKE ACTION NECESSARY TO EFFECTUATE THE PURPOSES AND FUNCTIONS OF THE ASSOCIATION. 11) TO TAKE ACTION AB INITIO IN AN AREA OF RESPONSIBILITY DELEGATED TO SUBSIDIARIES. FORM 990, PART VI, LINE 11B THE FORM 990 WAS REVIEWED BY SENIOR MANAGEMENT AT VARIOUS STEPS THROUGHOUT THE PREPARATION CYCLE. THE AUDIT AND MANAGEMENT COMPENSATION COMMITTEES REVIEWED AND APPROVED THE ORGANIZATION'S 2018 FORM 990 ON OCTOBER 29, 2019. THE BOARD WAS PROVIDED ACCESS TO THE FINAL FORM 990 FOR REVIEW (VIA A WEBSITE FOR BOARD MEMBERS ONLY) PRIOR TO FILING. FORM 990, PART VI, LINE 12C THE ORGANIZATION HAS WRITTEN CONFLICT OF INTEREST POLICIES FOR BOARD MEMBERS AND OFFICERS. THE WRITTEN CONFLICT OF INTEREST POLICY FOR BOARD MEMBERS REQUIRES INITIAL DISCLOSURE OF INTERESTS THAT COULD GIVE RISE TO CONFLICTS AS WELL AS ANNUAL DISCLOSURE BY THE SAME BOARD MEMBERS. ADDITIONALLY, THE WRITTEN POLICY CONTAINS AN ONGOING OBLIGATION OF BOARD MEMBERS TO DISCLOSE POTENTIAL CONFLICTS OF INTEREST AS THEY ARISE. FORM 990, PART VI, LINE 19 THE ORGANIZATION MAKES ITS GOVERNING DOCUMENTS AND THE FINRA CONSOLIDATED AUDITED FINANCIAL STATEMENTS AVAILABLE UPON REQUEST. FORM 990, PART VII, COLUMN B THE OFFICERS LISTED IN FORM 990, PART VII, COLUMN B, DEVOTE AN AVERAGE TOTAL OF 60 HOURS PER WEEK TO THE FILING ORGANIZATION AND ANY OR ALL OF THE FOLLOWING RELATED ORGANIZATIONS: FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC., AND FINRA INVESTOR EDUCATION FOUNDATION. FORM 990, PART XI, LINE 9 OTHER CHANGES IN NET ASSETS OR FUND BALANCES PRIMARILY RELATE TO ANY OR ALL OF THE FOLLOWING: CHANGES IN NET INCOME/(LOSS) AND ELIMINATION OF INTERCOMPANY TRANSACTIONS. FOR ADDITIONAL INFORMATION PLEASE SEE THE FINRA 2018 ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS. PART V, LINE 15 EXCISE TAX FOR COVERED EMPLOYEES WAS REPORTED AND PAID BY FINRA REGULATION'S PARENT, THE FINANCIAL INDUSTRY REGULATORY AUTHORITY. 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