Final answer:
An SEC and FINRA registered broker-dealer has met the regulatory requirements necessary for operating in the securities industry, ensuring investor protection and market integrity. This registration signifies adherence to federal laws and industry self-regulation through agencies like the SEC and FINRA, which were established to oversee and maintain fair financial markets.
Step-by-step explanation:
For a broker-dealer to be SEC and FINRA registered means that the broker-dealer has met the necessary regulatory requirements set forth by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA). The SEC is responsible for ensuring that the securities industry operates in a manner that is fair to all investors by enforcing securities laws and requiring the disclosure of important market information. FINRA, on the other hand, is a non-governmental organization that primarily oversees the individuals and firms that sell stocks, bonds, and other securities. By registering with both the SEC and FINRA, the broker-dealer is subject to both federal regulation and industry self-regulation to provide investor protection and market integrity.
On May 27, the Federal Securities Act was established, laying down the legal framework for securities disclosures, which led to the creation of the SEC. This agency, along with subsequent legislation, has been tasked with regulating the investment industry, including the supervision of broker-dealers. An SEC and FINRA registered broker-dealer is, therefore, committed to upholding the standards and practices that protect the interests of the investing public and maintain trust in the financial markets.