2018-11-15T12:46:35-06:00 2017-12-31 ERNST & YOUNG US LLP 1900 SCRIPPS CENTER 312 WALNUT ST CINCINNATI OH 45202 990 2017-01-01 530088710 FINANCIAL INDUSTRY REGULATORY AUTHORITY INC % MARCIA ASQUITH FINA 2027288949 1735 K STREET NW ROCKVILLE MD 20850 ROBERT A RENNER VICE PRESIDENT 2403865303 2018-11-15 true JULIE L SPARKS P01268401 5136121400 2018-11-12 75.23.198.254 86597020183195000002 2018-11-15 P 8D0B852B2DF3F1DF6E94D69BC933493626A205FF 792E0AAC5A27EF8E692221D1D01611EA294E7B56 2017 2019-02-21 02:37:17Z X ROBERT W COOK 1735 K STREET NW WASHINGTON DC 200061506 1318588448 false X WWW.FINRA.ORG X 1936 DE FINRA IS DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY THROUGH EFFECTIVE AND EFFICIENT REGULATION OF THE SECURITIES INDUSTRY. 23 20 3950 2 11553048 0 0 604983103 647868600 67823025 88470722 598789116 571346331 1271595244 1307685653 2200000 0 0 0 694306055 687502550 0 0 0 737438969 757205522 1433945024 1444708072 -162349780 -137022419 2245131156 2264413001 622392881 657222625 1622738275 1607190376 X FINRA 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 true false false false false false true true false false false true false true false false true false false false false false false false false true false false false false true true false false false false false true true true false true X 2599 0 true 3950 true true true false false false false false X 23 20 true false false false true true true true true false false true true true true true true true true false CA X MARCIA ASQUITH 2027288949 1735 K STREET NW WASHINGTON DC 200061506 X ROBERT W COOK PRESIDENT & CEO 60.0 0.0 X X 1008615 0 442908 JOHN J BRENNAN CHAIRMAN - THRU 7/17/17 3.0 2.0 X 85235 0 0 WILLIAM H HEYMAN CHAIRMAN - AS OF 7/18/17 3.0 2.0 X 56967 0 0 MARK W CRESAP BOARD MEMBER - THRU 8/22/17 2.0 2.0 X 60122 0 0 STEPHEN M CUTLER BOARD MEMBER 2.0 2.0 X 0 0 0 CAROL ANTHONY JOHN DAVIDSON BOARD MEMBER 2.0 0.0 X 87697 0 0 ANDREW S DUFF BOARD MEMBER 2.0 0.0 X 60139 0 0 STEPHEN A KOHN BOARD MEMBER 2.0 2.0 X 75717 0 0 BRIAN J KOVACK BOARD MEMBER 2.0 2.0 X 80197 0 0 ROCHELLE LAZARUS BOARD MEMBER 2.0 0.0 X 88382 0 0 JOSHUA S LEVINE BOARD MEMBER 2.0 2.0 X 80229 0 0 BRIGITTE C MADRIAN BOARD MEMBER 2.0 2.0 X 80200 0 0 JOSEPH M MECANE BOARD MEMBER 2.0 0.0 X 0 0 0 ROBERT A MUH BOARD MEMBER 2.0 2.0 X 82516 0 0 KATHLEEN A MURPHY BOARD MEMBER 2.0 2.0 X 80200 0 0 EILEEN MURRAY BOARD MEMBER 2.0 0.0 X 80214 0 0 CHARLES I PLOSSER BOARD MEMBER 2.0 0.0 X 81869 0 0 RANDAL K QUARLES BOARD MEMBER - THRU 10/9/17 2.0 2.0 X 68505 0 0 JOSEPH RV ROMANO BOARD MEMBER 2.0 2.0 X 80265 0 0 HILLARY A SALE BOARD MEMBER 2.0 2.0 X 80781 0 0 LESLIE F SEIDMAN BOARD MEMBER 2.0 2.0 X 95834 0 0 JOHN W THIEL BOARD MEMBER 2.0 0.0 X 80786 0 0 LUIS M VICEIRA BOARD MEMBER 2.0 0.0 X 85982 0 0 ELISSE B WALTER BOARD MEMBER 2.0 6.0 X 88691 0 0 AMY L WEBBER BOARD MEMBER 2.0 0.0 X 40717 0 0 SUSAN WOLBURGH JENAH BOARD MEMBER 2.0 2.0 X 85794 0 0 TODD T DIGANCI EXECUTIVE VICE PRESIDENT/CFAO 60.0 0.0 X 1291897 0 185458 MARCIA E ASQUITH EVP AND CORPORATE SECRETARY 60.0 0.0 X 703414 0 137476 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 60.0 0.0 X 910537 0 1765406 ROBERT L D COLBY EVP AND CHIEF LEGAL OFFICER 60.0 0.0 X 1236628 0 64515 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 60.0 0.0 X 913435 0 105822 STEVEN A JOACHIM EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1251365 0 16631 STEVEN J RANDICH EVP & CIO 60.0 0.0 X 1079111 0 273937 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 60.0 0.0 X 650792 0 120405 SUSAN SCHROEDER EXECUTIVE VICE PRESIDENT 60.0 0.0 X 763590 0 74707 JONATHAN S SOKOBIN SENIOR VICE PRESIDENT 60.0 0.0 X 525371 0 132791 CAMERON FUNKHOUSER EXECUTIVE VICE PRESIDENT 60.0 0.0 X 790937 0 123526 MICHAEL RUFINO EXECUTIVE VICE PRESIDENT 60.0 0.0 X 767892 0 185564 DANIEL SIBEARS EXECUTIVE VICE PRESIDENT 60.0 0.0 X 832070 0 143310 MICHAEL SOLOMON SENIOR VICE PRESIDENT 60.0 0.0 X 881300 0 76766 ROBERT L WOOD SENIOR VICE PRESIDENT 60.0 0.0 X 802203 0 97697 RICHARD G KETCHUM FMR CHAIRMAN & CEO 0.0 0.0 X 937500 0 3650 CARLO DI FLORIO EXECUTIVE VICE PRESIDENT 60.0 0.0 X 716890 0 184908 TRACY B JOHNSON SENIOR VICE PRESIDENT 60.0 0.0 X 619485 0 98762 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 60.0 0.0 X 706695 0 105937 19176766 0 4340176 2223 true true false AMAZON WEB SERVICES 12900 WORLDGATE DRIVE HERNDON VA 20170 HOSTING SERVICES 21274470 TEK SYSTEMS PO BOX 198568 ATLANTA GA 30384 TECH CONSULTING 14690788 NASDAQ TECHNOLOGY AB SE-105 78 STOCKHOLM 0 SW HOSTING SERVICES 14134408 PROMETRIC PO BOX 223608 PITTSBURGH PA 15251 TESTING SERVICES 10561814 COMPUGAIN CORPORATION 13241 WOODLAND PARK DRIVE HERNDON VA 20171 CONSULTING 5458095 131 0 ACTIVITY ASSESSMENT 900099 547858414 547858414 TRANSPARENCY SERVICE FEES 900099 72258042 72258042 CONTRACT SERVICE FEES 900099 27327297 14460296 12867001 ALL OTHER PROGRAM SERVICE REVENUE 900099 424847 424847 647868600 24484935 -1535999 26020934 0 144351 144351 724737 492748 231989 0 231989 202046 29943 74395834 8354628 2055419 66041206 -2055419 63985787 63985787 0 0 0 0 0 0 0 0 0 SUBSIDIARY FEES & OVERHEAD ALLOCATION 900099 570949991 570949991 OTHER 900099 20000 20000 570969991 1307685653 1205951590 11553048 90181015 0 0 0 0 14166556 0 519581650 70176932 51208860 32368552 5912136 5250501 1298579 556580 0 1634404 10428494 4302 8052960 143460897 0 3285458 5065852 0 1045834 781054 0 15247128 2105362 ACTIVITY ASSESSMENT 547858414 TEMPORARY HELP 1002325 TAXES 1952077 BANK SERVICE FEES 997884 1265281 1444708072 78823492 60182410 250779879 250834251 0 0 109036570 169735570 0 0 0 0 0 0 0 0 14893216 22231587 312033633 205965374 111400143 106068259 922824277 703216958 693135502 925425703 0 0 19587255 16420435 44650822 10297828 2245131156 2264413001 604905225 643372782 0 0 17487656 13849843 0 0 0 0 0 0 0 0 0 0 0 0 622392881 657222625 X 156762978 156762978 0 0 1465975297 1450427398 1622738275 1607190376 2245131156 2264413001 X -137022419 30447455 1634404 89392661 X false true X true false false false false 600000 600000 600000 22260481 22260481 74070785 30373731 43697054 92558584 57225986 35332598 61699570 57215822 4483747 61444213 61149835 294379 106068259 PRIVATE INVESTMENTS 924981842 F MARKETABLE ALTERNATIVE INVESTM 143861 F INVESTMENT IN NSCC 300000 C 925425703 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. FOR 2014 THROUGH 2017, THE YEARS MANAGEMENT CONSIDERS TO BE OPEN FOR EXAMINATION BY TAXING AUTHORITIES, MANAGEMENT DID NOT IDENTIFY THE EXISTENCE OF ANY UNCERTAIN TAX POSITIONS RELATED TO CURRENT OPERATIONS. HOWEVER, FINRA HAS RECOGNIZED AN UNCERTAIN TAX POSITION RELATED TO THE SUCCESSION TO THE NAHO NOLS. THE UNRECOGNIZED TAX BENEFIT OF THE NAHO NOL HAS BEEN PARTIALLY OFFSET BY NON-NAHO NOLS RESULTING IN A NET UNRECOGNIZED TAX BENEFIT LIABILITY OF $3.0 MILLION AS OF DECEMBER 31, 2017, AND $1.5 MILLION AS OF DECEMBER 31, 2016. Central America and the Caribbean Investments 270000000 North America Program Services IT SERVICES 333000 270333000 270333000 true false true true true false X X X X true true X X X X X false true false ROBERT W COOK PRESIDENT & CEO 981846 0 0 0 26769 0 440985 0 1923 0 1451523 0 0 RICHARD G KETCHUM FMR CHAIRMAN & CEO 0 0 937500 0 0 0 3650 0 0 0 941150 0 0 TODD T DIGANCI EXECUTIVE VICE PRESIDENT/CFAO 572216 695000 24681 145105 40353 1477355 MARCIA E ASQUITH EVP AND CORPORATE SECRETARY 309672 355000 38742 113373 24103 840890 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 424276 465000 21261 1713401 52005 2675943 ROBERT L D COLBY EVP AND CHIEF LEGAL OFFICER 478688 490000 267940 40950 23565 1301143 108006 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 442772 465000 5663 76230 29592 1019257 STEVEN A JOACHIM EXECUTIVE VICE PRESIDENT 20855 440000 790510 12145 4486 1267996 STEVEN J RANDICH EVP & CIO 474758 580000 24353 239633 34304 1353048 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 326733 245000 79059 83510 36895 771197 SUSAN SCHROEDER EXECUTIVE VICE PRESIDENT 324133 240000 199457 35525 39182 838297 JONATHAN S SOKOBIN SENIOR VICE PRESIDENT 283684 220000 21687 88744 44047 658162 CAMERON FUNKHOUSER EXECUTIVE VICE PRESIDENT 349962 418000 22975 90799 32727 914463 MICHAEL RUFINO EXECUTIVE VICE PRESIDENT 333573 413000 21319 134050 51514 953456 DANIEL SIBEARS EXECUTIVE VICE PRESIDENT 371578 385000 75492 110379 32931 975380 MICHAEL SOLOMON SENIOR VICE PRESIDENT 310030 345000 226270 40950 35816 958066 ROBERT L WOOD SENIOR VICE PRESIDENT 306737 285000 210466 62859 34838 899900 51886 CARLO DI FLORIO EXECUTIVE VICE PRESIDENT 417244 278000 21646 122355 62553 901798 TRACY B JOHNSON SENIOR VICE PRESIDENT 313522 285500 20463 86456 12306 718247 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 336895 347000 22800 82033 23904 812632 SUPPLEMENTAL COMPENSATION INFORMATION FOR THE HIGHEST COMPENSATED EXECUTIVES, BASE SALARY AND INCENTIVE COMPENSATION (EARNED IN THE PRIOR YEAR) REPORTED IN COLUMNS B(i) AND B(ii) ARE INDEPENDENTLY DETERMINED AND APPROVED BY THE MANAGEMENT COMPENSATION COMMITTEE OF THE BOARD OF GOVERNORS. OTHER REPORTABLE COMPENSATION (COLUMN B(iii)) IS LARGELY COMPOSED OF RETIREMENT VESTING AND/OR PAYOUT EVENTS FROM NON-QUALIFIED PLANS, AS WELL AS SEVERANCE OR SEPARATION PAYMENTS, IF APPLICABLE. FOR FURTHER DETAILS REGARDING EXECUTIVE COMPENSATION, PLEASE REFER TO SCHEDULE O. SCHEDULE J, PART I, LINE 1 FIRST CLASS OR CHARTER TRAVEL: FIRST CLASS AIR TRAVEL IS LIMITED TO EXTENDED AND INTERNATIONAL FLIGHTS AND BOARD TRAVEL, SUBJECT TO CERTAIN OTHER RESTRICTIONS REGARDING TIME AND DISTANCE. TRAVEL FOR COMPANIONS: TRAVEL FOR COMPANIONS IS LIMITED TO EMPLOYEES ON EXTENDED TRAVEL AND IS SUBJECT TO CERTAIN RESTRICTIONS REGARDING TIME AND DISTANCE. THE BOARD MEMBERS' TRAVEL POLICY AS WELL AS THE CONTRACT FOR THE CEO PROVIDE FOR SPOUSAL TRAVEL FOR CERTAIN BUSINESS-RELATED EVENTS. COMPANION TRAVEL IS TREATED AS TAXABLE COMPENSATION. HEALTH AND CLUB DUES: PARTIAL COVERAGE OF HEALTH CLUB DUES IS LIMITED TO A SMALL POPULATION OF EMPLOYEES WHO HAVE NO ACCESS TO ONSITE FACILITIES AND IS SUBJECT TO CERTAIN RESTRICTIONS. THE EMPLOYER PORTION OF THESE HEALTH CLUB DUES IS TREATED AS TAXABLE COMPENSATION. EXECUTIVE HEALTH PLAN: THE EXECUTIVE HEALTH PLAN IS LIMITED TO EMPLOYEES AT THE LEVEL OF EVP AND ABOVE AND OTHERS SPECIFICALLY DESIGNATED BY THE CEO. FOOD AND LODGING TRAVEL COSTS RELATED TO THE EXECUTIVE HEALTH PLAN ARE TREATED AS TAXABLE COMPENSATION. TAX INDEMNIFICATION: IT IS FINRA'S PRACTICE TO GROSS-UP CERTAIN NON-CASH EMPLOYEE RELOCATION EXPENSES. SCHEDULE J, PART II, LINE 5, COLUMN C THE COMPENSATION DISCLOSURE FOR SUSAN F. AXELROD INCLUDES $1.7M IN DEFERRED COMPENSATION RELATED TO HER SEPARATION FROM FINRA IN APRIL 2018. THESE AMOUNTS WERE PAID IN 2018 AND ARE REFLECTIVE OF HER 28 YEARS OF SERVICE AT BOTH THE NEW YORK STOCK EXCHANGE AND FINRA. SUPPLEMENTAL COMPENSATION INFORMATION 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.REMAINING PARTICIPANTS ARE FULLY VESTED. 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. PARTICIPANTS IN THE NON-QUALIFIED DEFINED BENEFIT PLAN THAT HAD ACCUMULATED BENEFITS RECOGNIZED IN 2017 INCLUDE: STEVEN A. JOACHIM - $754,939 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 2017 INCLUDE: ROBERT L. D. COLBY- $240,896 STEPHEN M. SCHOENEMAN - $54,586 SUSAN SCHROEDER - $179,206 MICHAEL SOLOMON - $205,392 ROBERT L. WOOD - $189,793 VOLUNTARY COMPENSATION DISCLOSURES: STEPHEN M. CUTLER AND JOSEPH M. MECANE WERE VOLUNTEER BOARD MEMBERS IN 2017 AND DID NOT RECEIVE COMPENSATION FOR THEIR SERVICES. KOVACK SECURITIES >35% CONTROLLED ENTITY 528955 VARIOUS SERVICES false THOMAS J DIGANCI FAMILY MEMBER 77479 COMPENSATION false RICHARD ROMANO FAMILY MEMBER 20325 COMPENSATION false FORM 990, SCHEDULE L, PART IV BUSINESS TRANSACTIONS INVOLVING INTERESTED PERSONS BRIAN KOVACK IS A MEMBER OF THE FINRA BOARD OF GOVERNORS AND IS AN OWNER AND THE PRESIDENT OF KOVACK SECURITIES, INC., A FINRA MEMBER FIRM. KOVACK SECURITIES, INC. PAID FINRA $528,955 FOR REGULATORY FEES AND SERVICES IN 2017. THOMAS J. DIGANCI WAS AN EMPLOYEE OF FINRA, AND THE SON OF TODD T. DIGANCI, EXECUTIVE VICE PRESIDENT & CFAO. FINRA PAID MR. THOMAS J. DIGANCI ANNUAL COMPENSATION OF $77,749 IN 2017. THERE IS NO DIRECT REPORTING RELATIONSHIP BETWEEN TODD AND THOMAS DIGANCI. RICHARD ROMANO WAS A MEMBER OF FINRA'S INVESTMENT COMMITTEE AND THE FATHER OF JOSEPH ROMANO, A FINRA BOARD MEMBER. FINRA PAID RICHARD ROMANO ANNUAL COMPENSATION OF $20,325 IN 2017. THERE IS NO DIRECT REPORTING RELATIONSHIP BETWEEN JOSEPH AND RICHARD ROMANO. VOLUNTARY DISCLOSURE FOR FINANCIAL INFORMATION AS THE PARENT ORGANIZATION, FINRA INCURS ALL DIRECT AND INDIRECT EXPENSES, INCLUDING SALARY AND BENEFITS OF ITS WHOLLY-OWNED SUBSIDIARY FINRA REGULATION, INC. THE FINANCIAL INFORMATION INCLUDED IN THIS FORM 990 IS PRESENTED ON A STAND-ALONE BASIS. AMOUNTS ALIGNED WITH THE PROGRAMS CONDUCTED UNDER THE GOVERNANCE OF THE FINRA REGULATION REGULATORY POLICY COMMITTEE ARE PRESENTED ON FINRA REGULATION'S FORM 990. THEREFORE, THE STATEMENTS AND SCHEDULES IN THIS FORM DO NOT REPRESENT THE CONSOLIDATED RESULTS FOR FINRA AND ITS SUBSIDIARIES. THE 2017 FORM 990 SHOULD BE READ IN CONJUNCTION WITH FINRA'S 2017 ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS-FINANCIALS. SEE ALSO SEPARATE 2017 FORMS 990 FOR RELATED ENTITIES, INCLUDING FINRA REGULATION AND FINRA INVESTOR EDUCATION FOUNDATION. FORM 990, PART III, LINE 4 FINRA IS A NOT-FOR-PROFIT ORGANIZATION DEDICATED TO INVESTOR PROTECTION AND MARKET INTEGRITY. IT REGULATES ONE CRITICAL PART OF THE SECURITIES INDUSTRY - BROKERAGE FIRMS DOING BUSINESS WITH THE PUBLIC IN THE UNITED STATES. FINRA, OVERSEEN BY THE SEC, WRITES RULES, EXAMINES FOR AND ENFORCES COMPLIANCE WITH FINRA RULES AND FEDERAL SECURITIES LAWS, REGISTERS BROKER-DEALER PERSONNEL AND OFFERS THEM EDUCATION AND TRAINING, AND INFORMS THE INVESTING PUBLIC. IN ADDITION, THROUGH ITS SUBSIDIARY, FINRA REGULATION, INC., FINRA PROVIDES SURVEILLANCE AND OTHER REGULATORY SERVICES FOR EQUITIES AND OPTIONS MARKETS, AS WELL AS TRADE REPORTING AND OTHER INDUSTRY UTILITIES. FINRA REGULATION ALSO ADMINISTERS A DISPUTE RESOLUTION FORUM FOR INVESTORS AND BROKERAGE FIRMS AND THEIR REGISTERED EMPLOYEES. FORM 990, PART VI, LINE 2 BOARD MEMBERS JOHN J. BRENNAN AND ROCHELLE LAZARUS HAD A BUSINESS RELATIONSHIP AS THEY SERVED TOGETHER ON THE BOARD OF GENERAL ELECTRIC. FORM 990, PART VI, LINE 6 FINRA IS ORGANIZED AS A NONSTOCK, NOT-FOR-PROFIT, MEMBERSHIP CORPORATION. NO REVENUES OR EARNINGS MAY BE USED FOR THE BENEFIT OF ANY INDIVIDUAL OR MEMBER. ANY REGISTERED BROKER, DEALER, MUNICIPAL SECURITIES BROKER OR DEALER, OR GOVERNMENT SECURITIES BROKER OR DEALER IS ELIGIBLE FOR MEMBERSHIP IN THE CORPORATION, EXCEPT FOR THOSE WHO FAIL OR CEASE TO SATISFY THE CORPORATION'S QUALIFICATION REQUIREMENTS, OR BECOME DISQUALIFIED, OR FAIL TO FILE CERTAIN FORMS AS THE CORPORATION PRESCRIBES. THE MEMBERS OF THE CORPORATION GENERALLY HAVE NO VOTING RIGHTS, OTHER THAN TO VOTE ON (1) AMENDMENTS TO THE BY-LAWS OF THE CORPORATION, (2) BUSINESS RAISED DURING THE ANNUAL OR SPECIAL MEETINGS OF MEMBERS, (3) THE ELECTION OF THE SMALL FIRM, MID-SIZED FIRM AND LARGE FIRM GOVERNORS, OR (4) OTHERWISE PROVIDED BY THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE OR FINRA'S RESTATED CERTIFICATE OF INCORPORATION. FORM 990, PART VI, LINE 7A SMALL FIRM MEMBERS ARE ENTITLED TO VOTE FOR THE ELECTION OF SMALL FIRM GOVERNORS, MID-SIZE FIRM MEMBERS ARE ENTITLED TO VOTE FOR THE ELECTION OF MID-SIZE FIRM GOVERNORS, AND LARGE FIRM MEMBERS ARE ENTITLED TO VOTE FOR THE ELECTION OF LARGE FIRM GOVERNORS, IN ACCORDANCE WITH THE PROCEDURES FOR SUCH A VOTE AS PROVIDED IN THE CORPORATION'S BY-LAWS AND CERTIFICATE OF INCORPORATION. FORM 990, PART VI, LINE 7B THE CORPORATION'S MEMBERS ARE ENTITLED TO VOTE ON ANY AMENDMENT TO THE BY-LAWS OF THE CORPORATION, IN ACCORDANCE WITH THE PROCEDURES FOR SUCH A VOTE AS PROVIDED IN THE CORPORATION'S BY-LAWS AND CERTIFICATE OF INCORPORATION. 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 2017 FORM 990 ON SEPTEMBER 26, 2018. 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 EMPLOYEES. 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. FINRA'S CODE OF CONDUCT APPLIES TO ALL EMPLOYEES OF FINRA (STAFF AND OFFICERS) AND DEFINES THE EXPECTATION OF EVERYONE WHO ACTS ON FINRA'S BEHALF, INCLUDING CONTRACTORS AND TEMPORARY EMPLOYEES ("TEMPORARY WORKERS"). THE CODE INCLUDES A WRITTEN CONFLICT OF INTEREST POLICY THAT PRECLUDES EMPLOYEES AND TEMPORARY WORKERS FROM HAVING A DIRECT OR INDIRECT INTEREST IN OR RELATIONSHIP WITH ANY ORGANIZATION WHERE THESE INTERESTS COULD CONCEIVABLY: A)HINDER FINRA'S OBJECTIVITY, INDEPENDENCE OR JUDGMENT OR CONDUCT IN CARRYING OUT FINRA'S RESPONSIBILITIES OR B) CREATE THE APPEARANCE OF A CONFLICT. EMPLOYEES AND TEMPORARY WORKERS HAVE AN ONGOING RESPONSIBILITY TO REPORT CONFLICTS UNDER THE CODE. ADDITIONALLY, EMPLOYEES MUST CERTIFY COMPLIANCE WITH THE CODE OF CONDUCT WITHIN 30 DAYS OF HIRE AND ANNUALLY THEREAFTER. EMPLOYEES AND TEMPORARY WORKERS ARE REGULARLY REMINDED OF THE RESOURCES THAT ARE AVAILABLE WHEN THEY ARE UNSURE WHAT TO DO WHEN FACED WITH A CONFLICT. IN ADDITION TO TALKING TO DEPARTMENTAL MANAGEMENT, EMPLOYEES AND TEMPORARY WORKERS CAN DISCUSS CONFLICT-RELATED CONCERNS WITH FINRA'S OFFICE OF GENERAL COUNSEL. IF THEY ARE UNCOMFORTABLE DISCLOSING AN ISSUE AND DISCLOSING THEIR IDENTITY, THEY CAN USE FINRA'S 24-HOUR ETHICSPOINT HOTLINE TO POSE QUESTIONS OR REPORT CONCERNS. FINRA'S WHISTLEBLOWER POLICY FORBIDS RETALIATION FOR INFORMATION OR GOOD-FAITH REPORTS ABOUT ACTUAL OR POSSIBLE VIOLATIONS OF THE CODE OF CONDUCT, FINRA POLICY OR THE LAWS AND REGULATIONS GOVERNING FINRA'S ACTIVITIES. FORM 990, PART VI, LINES 15A AND 15B THE MANAGEMENT COMPENSATION COMMITTEE OF THE FINRA BOARD OF GOVERNORS (THE "COMMITTEE") IS RESPONSIBLE FOR SETTING PAY FOR SELECT EXECUTIVES OF FINRA AND OFFICERS OF FINRA REGULATION. THE COMMITTEE IS COMPOSED OF FOUR NON-EMPLOYEE, NON-SECURITIES INDUSTRY MEMBERS OF THE BOARD OF GOVERNORS. THE COMMITTEE MET ON NOVEMBER 21, 2016 AND DECEMBER 14, 2016 TO ESTABLISH INCENTIVE COMPENSATION ATTRIBUTABLE TO THE PERFORMANCE OF SERVICES DURING CALENDAR YEAR 2016 AND TO ESTABLISH BASE SALARIES FOR CALENDAR YEAR 2017. AS A GENERAL POLICY, FINRA HAS DETERMINED ITS COMPETITIVE COMPENSATION POSITIONING SHOULD BE CONSIDERED AGAINST A BROAD SECTION OF FINANCIAL SERVICES/CAPITAL MARKET COMPANIES, AS THIS SECTOR IS THE MOST LIKELY SECTOR FROM WHICH WE RECRUIT TALENT AND THAT WOULD RECRUIT TALENT AWAY FROM THE COMPANY. WE ALSO BENCHMARK AGAINST GENERAL INDUSTRY POSITIONS AND LAW DEPARTMENTS FOR JOBS THAT ARE NOT UNIQUE TO THE FINANCIAL SERVICES INDUSTRY. THE COMMITTEE ENGAGED MERCER, INC. ("MERCER"), A THIRD-PARTY COMPENSATION CONSULTANT, TO PREPARE A COMPENSATION STUDY FOR REVIEW AT THESE MEETINGS. IN DETERMINING A BENCHMARKING STRATEGY FOR KEY EXECUTIVES, FINANCIAL SERVICES ORGANIZATIONS (BROKER-DEALERS, INVESTMENT BANKS, FEDERAL RESERVE BANKS, COMMERCIAL BANKS, INSURANCE COMPANIES, EXCHANGES AND REGULATORS) WERE DETERMINED TO BE THE MOST RELEVANT GROUPS FOR COMPARISON PURPOSES. THE COMMITTEE AND MERCER ENGAGED IN SUBSTANTIAL RESEARCH AND CONSIDERATION OF THE FUNCTIONS AND OPERATIONS OF SEVERAL POTENTIAL COMPARATORS AS WELL AS GENERAL COMPETITIVE CONDITIONS. IN DETERMINING SPECIFIC SALARY AND INCENTIVE COMPENSATION LEVELS FOR OFFICERS AND KEY EMPLOYEES, MANAGEMENT AND THE COMMITTEE CONSIDER: 1) OPERATIONAL RESULTS 2) STRATEGIC INITIATIVES 3) FINANCIAL HEALTH/RESULTS 4) INDIVIDUAL PERFORMANCE 5) COMPETITIVE COMPENSATION LEVELS AS PREPARED BY MERCER, INC., A THIRD-PARTY COMPENSATION CONSULTANT THE COMMITTEE'S MINUTES OF THE NOVEMBER 21, 2016 AND DECEMBER 14, 2016 MEETINGS WERE REVIEWED AND APPROVED AS ACCURATE AND COMPLETE. THE FULL BOARD FURTHER APPROVED THE 2016 INCENTIVE COMPENSATION OF THE CEO AT ITS MEETING ON DECEMBER 14, 2016. ALL COMPENSATION COMMITTEE MEMBERS EXCEPT LUIS VICEIRA WERE PRESENT AND VOTED FOR THE PROPOSED LEVEL OF EXECUTIVE COMPENSATION. 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, LINE 1A ESTIMATED AVERAGE HOURS PER WEEK THE OFFICERS / KEY EMPLOYEES 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: FINRA REGULATION, INC., AND FINRA INVESTOR EDUCATION FOUNDATION. FORM 990, PART VII, COLUMN C ONLY THOSE PERMANENT, NON-ADMINISTRATIVE, FULL-TIME EMPLOYEES WITH A DIRECT REPORTING RELATIONSHIP TO THE CEO ARE CONSIDERED KEY EMPLOYEES FOR PURPOSES OF THE FINRA FORM 990. THIS MAY RESULT IN AN ACTIVE EMPLOYEE BEING DESIGNATED AS FORMER AS REPORTING RELATIONSHIPS MAY CHANGE OVER TIME. FORM 990, PART VII, LINE 1 FORM 1096 ANNUAL SUMMARY AND TRANSMITTAL OF U.S. INFORMATION RETURNS ALL CONTRACTOR PAYMENTS AND APPLICABLE 1099S FOR FINRA REGULATION, INC. WERE REPORTED ON FORM 1096 FOR FINRA REGULATION, INC'S. PARENT COMPANY, THE FINANCIAL INDUSTRY REGULATORY AUTHORITY. 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), UNRECOGNIZED EMPLOYEE BENEFIT PLAN AMOUNTS AND UNREALIZED GAIN/(LOSS) ON INVESTMENTS. FOR ADDITIONAL INFORMATION PLEASE SEE THE 2017 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS-FINANCIALS. 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