A Reflection on FINRA's History: 1930s

An Enduring Mission Built on Necessity

As Americans grappled with the Great Depression, the U.S. government knew legislative reform was crucial to improve market regulation and safeguard investors. While the Securities Act of 1933 and the Securities Exchange Act of 1934 increased confidence in U.S. securities regulation, more oversight of the over-the-counter markets was needed. In 1939, the Investment Bankers Conference officially registered FINRA’s predecessor, the National Association of Securities Dealers (NASD), as a national securities association under amendments to the Maloney Act. 

Working under the supervision of the Securities and Exchange Commission, NASD was tasked with overseeing broker-dealer members and their market activities. Its goals were to prevent fraudulent and manipulative practices, promote just and equitable principles of trade, provide safeguards against unreasonable profits or charges, and protect investors and the public interest. 

Guided by a clear purpose as a self-regulatory organization, NASD had the power to create, standardize and enforce industry principles and regulations, hold brokers accountable to those practices, and keep the best interests of the investing public at the heart of the mission—a mission that has stood the test of time today. 

Throughout the next eight decades, NASD evolved into the FINRA we know today, adapting to an everchanging market, providing support to virtually every aspect of the securities business and empowering millions of investors to participate confidently in the markets. We enhanced regulatory standards to increase accountability, developed ground-breaking technology that allowed for more transparency, strengthened the education of firms, brokers and investors, and supplied resources as new products and services reached the public. At every turn, FINRA was there to advocate for a fair market and increase investor trust.