The SEC oversees the SRO’s such as the NASD, NYSE and AMEX cumulatively n/k/a FINRA.  The CFTC oversees the NFA, CBOE, CBT and the CME. No government agency regulates the FX.

The speaker went on to explain,  In turn the SRO’S regulate the BD’s and their employees.  The BDs through the CD and IAD and their employees, the IAs, CEs and CAs, review the BOM’s, RR’s, FA’s, AEs, IB and RIAs.  The RR’s FA’s AE’s, RA’s and IBs, RIAs make the money for the BDs selling products such as RR’s, CDs ETFs, UITs and CMOS as well as stocks such as MOT, BAC, DIS, INTC.  The RA’s in the RD supports the sales force by calculating and interpreting EPS, PEs, YTM, YTC, DY and other ratios for securities. The RAs also forecast and report on the performance of the DJIA, S&P QQQ and other indexes…

(translation below)

HUH?

Most people who are not on the inside will be lost in the first sentence.  Those who have heard some of the underlying terms may hang on for the first paragraph but few non-insiders will understand the entire conversation.

All too often Stock Brokers speak to their clients with this specialized language. Unfortunately clients, for whatever reason, do not ask for clarification.  Perhaps it is for fear of looking naive.  However, missing the meaning of one word in a conversation regarding your lifesavings could lead to significant repercussions including losses of those lifesavings.   Clients should always ask questions about what the Stock broker’s  plan is for their savings regardless of how naive it may make them feel.  The Stock Broker is representing him or herself as an expert in investments.  They should be able to explain in very simple terms how they will invest your funds.  Do not back down when the Stock Broker tells you it would be too hard to explain or assures you that you do not have to worry because they are acting in your best interest.  Ask questions.  If I were to speak to my clients using Latin legal jargon they would walk out of my office.  Similarly, if the broker puts you off or will not answer your questions you should find someone else.   Remember Stock Brokers get paid for how much they sell, not how well your account is doing. Their incentive is to get you to agree with them regardless of whether you understand what they are saying.  You worked hard for your money, you have a right to be fully informed of your investments including the risks the broker is taking with your savings.

In case you were wondering, the following is the translation of the paragraph above:

The Securities and Exchange Commission ( SEC ) oversees the Self Regulatory Organizations (SRO’s )  such as the National Association of Securities Dealers (NASD),  New York Stock Exchange (NYSE) and the American Stock Exchange (AMEX)  cumulatively Now Known As  (n/k/a)  the Financial Industry Regulatory Association (FINRA).  The Commodities Futures Trading Commission (CFTC) oversees the National Futures Association (NFA), Chicago Board of Options Exchange (CBOE), Commodities Board of Trade (CBT)  and the Chicago Mercantile Exchange (CME). On the other hand, no government agency regulates the Foreign Exchange (FX )  .

The Self Regulatory Organizations (SRO’s )regulate the Broker Dealers (BD) and their employees.  The Broker Dealers, through their Compliance Departments (CD) and Internal Audit Departments (IAD) and their employees, the Internal Auditors (IA), Compliance Examiners (CE) and Compliance Analysts (CA) , review the Branch Office Managers (BOM’s ), Registered Representatives (RR’s),  Account Executives (AEs), Financial Advisors (FA’s), Investment Bankers (IB’s), and Registered Investment Advisors ( RIA’s )

The Registered Representatives (RR’s), Account Executives (AEs), Financial Advisors (FA’s) Investment Bankers (IB’s) and Registered Investment Advisors (RIA’s) are the money makers for the firm. They  sell products such as Certificates of Deposits (CDs), Exchange Traded Funds (EIT),  Unit Investment Trusts (UIT), Debt Securities (DS), Collateral Mortgage Obligations (CMOS), Auction Rate Securities ( ARS ) as well as stocks such as Motorola (MOT), Bank of America (BAC), Disney (DIS), Intel (INTC).

The Research Analysts (RA)’s in the Research Department (RD) supports the sales force by calculating and interpreting Earning Per Share (EPS), Price Earning Ratio (PEs), Yield to Maturity (YTM), Yield to Call (YTC), Dividend Yield (DY) and other ratios for securities. The Research Analysts also forecast and report on the performance of the Dow Jones Industrial Average (DJIA), Standard and Poor’s 500 (S&P),   National Association of Securities Dealers Automated Quotations (NASDAQ), NASDAQ 100 (QQQ) and other securities indexes…

Eric Norstedt, www.usinvestorlaw.com