I. FINRA, Inc. | FINRA.org (2024)

FINRA, Inc. (referenced as "FINRA"), the Registered Section 15A Association, is the parent company of FINRA Regulation, Inc. (referenced individually as "FINRA Regulation") and FINRA CAT, LLC (referenced individually as "FINRA CAT") (referenced collectively as the "Subsidiaries"). The term "Association" shall refer to FINRA and the Subsidiaries collectively.

A. Other Defined Terms—The terms "Industry Governors," "Non-Industry Governors," "Public Governors," "Industry Directors," "Non-Industry Directors," "Public Directors," "Industry committee members," "Non-Industry committee members," and "Public committee members," as used herein, shall have the meanings set forth in the By-Laws of FINRA and FINRA Regulation, as applicable.

B. Functions and Authority of FINRA—FINRA shall have ultimate responsibility for the rules and regulations of the Association and its operation and administration. As set forth below in Sections II.A. and III, FINRA has delegated certain authority and functions to its Subsidiaries. Actions taken pursuant to delegated authority, however, remain subject to review, ratification or rejection by the FINRA Board in accordance with procedures established by that Board. Any function or responsibility as a registered securities association under the Securities Exchange Act of 1934 ("Act"), or as set forth in the Restated Certificate of Incorporation or the By-Laws is hereby reserved, except as expressly delegated to the Subsidiaries. In addition, FINRA expressly 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 FINRA.

3. To elect the FINRA Regulation Board of Directors and to select the FINRA CAT Board of Managers.

4. To review the rulemaking and disciplinary decisions of FINRA Regulation (See Section II.B. below).

5. To administer common overhead and technology of the Subsidiaries.

6. To administer the Office of Internal Audit as provided in the FINRA By-Laws.

7. To manage external Association relations on major policy issues.

8. To direct the Subsidiaries to take action necessary to effectuate the purposes and functions of the Association.

9. To take action ab initio in an area of responsibility delegated to FINRA Regulation in Section II or to FINRA CAT in Section III, subject to applicable provisions of the National Market System Plan Governing the Consolidated Audit Trail ("CAT NMS Plan")..

10. To resolve any disputes among the Subsidiaries.

C. Management Compensation Committee

1. The Management Compensation Committee shall be a Committee of the FINRA Board and shall have the following functions: To consider and recommend compensation policies, programs, and practices for employees of the Association.

2. Composition: The Management Compensation Committee shall consist of no fewer than four and no more than seven Governors. The number of Non-Industry committee members shall equal or exceed the number of Industry committee members. The Chief Executive Officer shall be an ex-officio, non-voting member of the Management Compensation Committee. Each member shall serve a term of office of one year.

3. Quorum: At all meetings of the Management Compensation Committee, a quorum for the transaction of business shall consist of a majority of the Management Compensation Committee, including not less than 50 percent of the Non-Industry committee members. In the absence of a quorum, a majority of the committee members present may adjourn the meeting until a quorum is present.

D. Market Regulation Committee

The Market Regulation Committee shall exercise the functions contained in the Rule 6200 Series, among others, in accordance with the procedures specified therein.

E. Access to and Status of Officers, Directors, Employees, Books, Records, and Premises of Subsidiaries

Notwithstanding the delegation of authority to the Subsidiaries, as set forth in Sections II.A. and III below, the staff, books, records, and premises of the Subsidiaries are the staff, books, records, and premises of FINRA subject to oversight pursuant to the Act, and all officers, directors, employees, and agents of the Subsidiaries are officers, directors, employees, and agents of FINRA for purposes of the Act, subject to applicable provisions of the CAT NMS Plan.