2017-11-13T16:57:44-06:00 2016-12-31 ERNST & YOUNG US LLP 1900 SCRIPPS CENTER 312 WALNUT ST CINCINNATI OH 45202 990 2016-01-01 530088710 FINANCIAL INDUSTRY REGULATORY AUTHORITY INC % MARCIA E ASQUITH FINA 2403865303 9509 KEY WEST AVE ROCKVILLE MD 20850 ROBERT A RENNER VICE PRESIDENT 2403865303 2017-11-13 true JULIE L SPARKS P01268401 5136121400 108.206.163.59 86597020173175000011 2017-11-13 P F0221F55EBF6EDBC8C96953E88092F7B5405D009 582F47EFACDD6166E52205D1FBFEA2601660FA18 2016 2017-02-10 21:41:12Z ROBERT W COOK 1735 K STREET NW WASHINGTON DC 200061506 2265327981 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. 22 19 3970 2 16065073 0 0 538514177 604983103 52229460 67823025 113084568 598789116 703828205 1271595244 50000000 2200000 0 0 240623827 694306055 0 0 0 679366292 737438969 969990119 1433945024 -266161914 -162349780 2171652984 2245131156 442881662 622392881 1728771322 1622738275 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 false false false false false false false true false true false false false false true true false false false false false true true true false true 2684 0 true 3970 true true true false false false false false X 22 19 true false false false true true true true true false false true true true true true true true true false CA X MARCIA E ASQUITH 2027288949 1735 K STREET NW WASHINGTON DC 200061506 X ROBERT W COOK PRESIDENT & CEO 60.0 0.0 X X 348888 0 93424 RICHARD G KETCHUM CHAIRMAN & CEO - THRU 8/14/16 60.0 0.0 X X 2679262 0 86547 JOHN J BRENNAN CHAIRMAN - AS OF 8/15/16 3.0 0.0 X 113421 0 0 MARK W CRESAP BOARD MEMBER 2.0 0.0 X 80704 0 0 STEPHEN M CUTLER BOARD MEMBER 2.0 0.0 X 0 0 0 CAROL ANTHONY JOHN DAVIDSON BOARD MEMBER 2.0 0.0 X 95246 0 0 GREGORY J FLEMING BOARD MEMBER - THRU 1/26/16 2.0 0.0 X 0 0 0 WILLIAM H HEYMAN BOARD MEMBER - THRU 9/19/16 2.0 0.0 X 67863 0 0 SUSAN WOLBURGH-JENAH BOARD MEMBER 2.0 0.0 X 80178 0 0 ROBERT KEENAN BOARD MEMBER - THRU 9/19/16 2.0 0.0 X 60268 0 0 BRIAN J KOVACK BOARD MEMBER 2.0 0.0 X 80193 0 0 ROCHELLE LAZARUS BOARD MEMBER 2.0 0.0 X 88083 0 0 JOSHUA S LEVINE BOARD MEMBER 2.0 0.0 X 80314 0 0 BRIGITTE C MADRIAN BOARD MEMBER 2.0 0.0 X 80255 0 0 JOSEPH M MECANE BOARD MEMBER 2.0 0.0 X 0 0 0 ROBERT A MUH BOARD MEMBER 2.0 0.0 X 42202 0 0 KATHLEEN A MURPHY BOARD MEMBER 2.0 0.0 X 80190 0 0 EILEEN MURRAY BOARD MEMBER 2.0 0.0 X 40100 0 0 CHARLES I PLOSSER BOARD MEMBER 2.0 0.0 X 80120 0 0 RANDAL K QUARLES BOARD MEMBER 2.0 0.0 X 86911 0 0 JOSEPH ROMANO BOARD MEMBER 2.0 0.0 X 80687 0 0 HILLARY SALE BOARD MEMBER 2.0 0.0 X 75100 0 0 JOHN W SCHMIDLIN BOARD MEMBER - THRU 8/19/16 2.0 0.0 X 60198 0 0 ROBERT W SCULLY BOARD MEMBER - THRU 5/6/16 2.0 2.0 X 40363 0 0 LESLIE F SEIDMAN BOARD MEMBER 2.0 0.0 X 87863 0 0 JOHN W THIEL BOARD MEMBER 2.0 0.0 X 80381 0 0 LUIS M VICEIRA BOARD MEMBER 2.0 0.0 X 80275 0 0 ELISSE B WALTER BOARD MEMBER 2.0 6.0 X 87975 0 0 JAMES D WEDDLE BOARD MEMBER - THRU 9/19/16 2.0 0.0 X 65883 0 0 TODD T DIGANCI EXECUTIVE VICE PRESIDENT & CFO 60.0 0.0 X 1340176 0 159204 MARCIA E ASQUITH EVP AND CORPORATE SECRETARY 60.0 0.0 X 738994 0 83536 F GREGORY AHERN EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1372916 0 60107 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1265910 0 88643 ROBERT L D COLBY EVP AND CHIEF LEGAL OFFICER 60.0 0.0 X 1042063 0 160936 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 60.0 0.0 X 2834760 0 96780 STEVEN A JOACHIM EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1078536 0 113852 STEVEN J RANDICH EVP & CIO 60.0 0.0 X 1073056 0 179732 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 60.0 0.0 X 793205 0 100080 JONATHAN S SOKOBIN SENIOR VICE PRESIDENT 60.0 0.0 X 672687 0 75770 J BRADLEY BENNETT EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1249950 0 37064 CARLO DI FLORIO EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1038245 0 74364 ROBERT MARCHMAN EXECUTIVE VICE PRESIDENT 60.0 0.0 X 920704 0 88970 MICHAEL RUFINO EXECUTIVE VICE PRESIDENT 60.0 0.0 X 1039393 0 87392 WILLIAM WOLLMAN EXECUTIVE VICE PRESIDENT 60.0 0.0 X 954646 0 69914 TRACY B JOHNSON SENIOR VICE PRESIDENT 60.0 0.0 X 785310 0 40464 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 60.0 0.0 X 727311 0 110018 23770785 0 1806797 2208 true true false AMAZON WEB SERVICES 12900 WORLDGATE DRIVE HERNDON VA 20170 HOSTING SERVICES 23007809 TEK SYSTEMS PO BOX 198568 ATLANTA GA 30384 TECH CONSULTING 16854136 NASDAQ TECHNOLOGY AB SE-105 78 STOCKHOLM 0 SW HOSTING SERVICES 13839447 PROMETRIC PO BOX 223608 PITTSBURGH PA 15251 TESTING SERVICES 11054298 RANDSTAD INHOUSE SERVICES 2015 SOUTH PARK PLACE ATLANTA GA 30309 TEMPORARY HELP 7501168 145 0 ACTIVITY ASSESSMENT 900099 507118161 507118161 TRANSPARENCY SERVICE FEES 900099 68174591 68174591 CONTRACT SERVICE FEES 900099 29370594 13989453 15381141 ALL OTHER PROGRAM SERVICE REVENUE 900099 319757 319757 604983103 31614134 495717 31118417 0 2383518 2383518 706862 499564 207298 0 207298 188215 19083 1029442064 990926815 2306358 38515249 -2306358 36208891 36208891 0 0 0 0 0 0 0 0 0 SUBSIDIARY OVERHEAD ALLOCATION 900099 596198300 596198300 596198300 1271595244 1185800262 16065073 69729909 2200000 0 0 0 14434421 0 522376245 71133951 53472765 32888673 7954620 3540997 1201500 645022 0 2093518 11767663 5422551 8574291 149966992 0 5754602 5019098 0 1260070 678216 0 19229369 2222813 ACTIVITY ASSESSMENT 507118161 TEMPORARY HELP 1109387 TAXES 1920507 BANK SERVICE FEES 955193 1004399 1433945024 103625757 78823492 202223015 250779879 0 0 78767062 109036570 0 0 0 0 0 0 0 0 21579013 14893216 444218032 332817889 118828038 111400143 880954597 922824277 699447153 693135502 0 0 24034008 19587255 42194341 44650822 2171652984 2245131156 423185470 604905225 0 0 19696192 17487656 0 0 0 0 0 0 0 0 0 0 0 0 442881662 622392881 X 156762978 156762978 0 0 1572008344 1465975297 1728771322 1622738275 2171652984 2245131156 X -162349780 -28789731 2093520 83012944 X false true X true false false false false 670000 670000 670000 22260481 22260481 74070785 28364015 45706770 94835315 56715103 38120212 74381251 69668934 4712317 178670200 178069837 600363 111400143 PRIVATE INVESTMENTS 692604662 F MARKETABLE ALTERNATIVE INVESTM 230840 F INVESTMENT IN NSCC 300000 C 693135502 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. IN STEP 2 (MEASUREMENT), 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. DURING THE YEARS FROM 2013 TO 2016, WHICH REPRESENT 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 OTHER TAX CREDITS AND NON-NAHO NOLS RESULTING IN A NET UNRECOGNIZED TAX BENEFIT LIABILITY OF $1.5 MILLION AS OF DECEMBER 31, 2016. true FINRA INVESTOR EDUCATION FOUNDATION 1735 K STREET NW WASHINGTON DC 20006 200863779 501(C)(4) 2200000 CONTRIBUTION 1 OVERSIGHT AND RECORD KEEPING OF CONTRIBUTIONS CHARITABLE CONTRIBUTIONS ARE REVIEWED AND APPROVED BY THE APPROPRIATE BUSINESS HEAD (OR THEIR DESIGNEE). THE ORGANIZATION MAINTAINS RECORDS TO SUBSTANTIATE THE AMOUNT AND THE PURPOSE OF THE CHARITABLE CONTRIBUTIONS. X X X X X true true X X X X X true true false ROBERT W COOK PRESIDENT & CEO 328109 20779 92865 559 442312 RICHARD G KETCHUM CHAIRMAN & CEO - THRU 8/14/16 770809 1500000 408453 68094 18453 2765809 TODD T DIGANCI EXECUTIVE VICE PRESIDENT & CFO 565073 750000 25103 128438 30766 1499380 MARCIA E ASQUITH EVP AND CORPORATE SECRETARY 262392 300000 176602 46097 37439 822530 91671 F GREGORY AHERN EXECUTIVE VICE PRESIDENT 327339 410000 635577 32800 27307 1433023 SUSAN F AXELROD EXECUTIVE VICE PRESIDENT 424828 500000 341082 46761 41882 1354553 196010 ROBERT L D COLBY EVP AND CHIEF LEGAL OFFICER 490048 525000 27015 142006 18930 1202999 11538 THOMAS R GIRA EXECUTIVE VICE PRESIDENT 439891 500000 1894869 57154 39626 2931540 273631 STEVEN A JOACHIM EXECUTIVE VICE PRESIDENT 372140 475000 231396 81903 31949 1192388 87179 TRACY B JOHNSON SENIOR VICE PRESIDENT 312103 285500 187707 29272 11192 825774 101629 STEVEN J RANDICH EVP & CIO 475310 575000 22746 143473 36259 1252788 STEPHEN M SCHOENEMAN SENIOR VICE PRESIDENT 325748 265000 202457 66240 33840 893285 107713 THOMAS M SELMAN EXECUTIVE VICE PRESIDENT 334784 370000 22527 65669 44349 837329 JONATHAN S SOKOBIN SENIOR VICE PRESIDENT 282851 225000 164836 35450 40320 748457 86045 J BRADLEY BENNETT EXECUTIVE VICE PRESIDENT 416914 500000 333036 33469 3595 1287014 191477 CARLO DI FLORIO EXECUTIVE VICE PRESIDENT 417796 300000 320449 30150 44214 1112609 185342 ROBERT MARCHMAN EXECUTIVE VICE PRESIDENT 321990 350000 248714 58990 29980 1009674 MICHAEL RUFINO EXECUTIVE VICE PRESIDENT 332644 430000 276749 41646 45746 1126785 78618 WILLIAM WOLLMAN EXECUTIVE VICE PRESIDENT 335676 365000 253970 39993 29921 1024560 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 AIRFARE IS AVAILABLE TO ALL EMPLOYEES AND MEMBERS OF THE BOARD OF GOVERNORS SUBJECT TO A NUMBER OF CERTAIN RESTRICTIONS REGARDING TIME AND DISTANCE. TRAVEL FOR COMPANIONS: COMPANION TRAVEL IS AVAILABLE TO ALL EMPLOYEES AND MEMBERS OF THE BOARD OF GOVERNORS SUBJECT TO A NUMBER OF CERTAIN RESTRICTIONS. COMPANION TRAVEL IS TREATED AS TAXABLE COMPENSATION. HEALTH AND CLUB DUES: HEALTH AND CLUB DUES ARE AVAILABLE TO ALL EMPLOYEES SUBJECT TO A NUMBER OF CERTAIN RESTRICTIONS. HEALTH AND CLUB DUES ARE TREATED AS TAXABLE COMPENSATION. EXECUTIVE HEALTH PLAN: THE EXECUTIVE HEALTH PLAN IS AVAILABLE TO EMPLOYEES AT THE LEVEL OF EVP AND ABOVE AND OTHERS AS DESIGNATED BY THE CEO. FOOD AND LODGING TRAVEL COSTS RELATED TO THE EXECUTIVE HEALTH PLAN ARE TREATED AS TAXABLE COMPENSATION. TAX INDEMNIFICATION: GIFTS TO EMPLOYEES ARE CONSIDERED TAXABLE COMPENSATION UNDER THE IRS CODE. THE FAIR MARKET VALUE OF THE GIFT TO THE EMPLOYEE WILL BE INCLUDED AS WAGES ON THE EMPLOYEE'S W-2. IN GENERAL, IT WAS FINRA'S PRACTICE TO "GROSS UP,ADJUST THE WAGES AND TAXES SO THAT THE TAX EFFECT OF RECEIVING A GIFT IS NEUTRAL TO THE EMPLOYEE. IT IS FINRA'S PRACTICE TO "GROSS-UP" CERTAIN EMPLOYEE RELOCATION EXPENSES. PERSONAL SERVICES: THE CONTRACT OF RICHARD KETCHUM, THE FORMER CEO, PROVIDED FOR A CAR AND DRIVER IN BOTH NEW YORK CITY, NEW YORK AND WASHINGTON, D.C. TO BE USED FOR BUSINESS PURPOSES. THESE SERVICES, WHICH WERE USED PRINCIPALLY BY THE CEO, WERE USED BY OTHER FINRA EMPLOYEES FOR BUSINESS PURPOSES WHEN AVAILABLE. THE FORMER CEO'S CONTRACT ALSO PROVIDED FOR COSTS INCURRED RELATED TO PERSONAL FINANCIAL AND TAX COUNSELING, UP TO $20,000 PER CALENDAR YEAR, AS WELL AS SPOUSAL TRAVEL FOR CERTAIN BUSINESS-RELATED EVENTS. THE CONTRACT FOR THE CURRENT CEO PROVIDES FOR SPOUSAL TRAVEL FOR CERTAIN BUSINESS-RELATED EVENTS BUT DOES NOT PROVIDE FOR A CAR AND DRIVER OR PERSONAL FINANCIAL SERVICES. SUPPLEMENTAL COMPENSATION INFORMATION 4A) IN CONNECTION WITH F. GREGORY AHERN'S SEPARATION FROM FINRA, HE WAS PAID $46,154 IN 2016. 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 HAVE 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. PARTICIPANTS IN THE NON-QUALIFIED DEFINED BENEFIT PLAN THAT HAD A CLIFF VESTING EVENT IN 2016 INCLUDE: THOMAS R. GIRA - $1,889,230, OF WHICH $273,631 HAD BEEN PREVIOUSLY REPORTED. 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 2016 INCLUDE: NONE 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 2016 INCLUDE: F. GREGORY AHERN - $85,871 MARCIA E. ASQUITH - $152,376 SUSAN F. AXELROD - $319,856 J. BRADLEY BENNETT - $311,014 CARLO DI FLORIO - $299,606 TRACY B. JOHNSON - $167,936 RICHARD G. KETCHUM - $300,020 ROBERT MARCHMAN - $227,040 MICHAEL RUFINO - $255,363 STEPHEN M. SCHOENEMAN - $178,096 JONATHAN S. SOKOBIN - $144,509 WILLIAM WOLLMAN - $233,334 VOLUNTARY COMPENSATION DISCLOSURES: GREGORY J. FLEMING AND JOSEPH M. MECANE WERE VOLUNTEER BOARD MEMBERS IN 2016 AND DID NOT RECEIVE COMPENSATION FOR THEIR SERVICES. RICHARD ROMANO FAMILY MEMBER 20843 COMPENSATION false KOVACK SECURITIES >35% CONTROLLED ENTITY 489811 VARIOUS SERVICES false THOMAS J DIGANCI FAMILY MEMBER 68647 COMPENSATION false FORM 990, SCHEDULE L, PART IV BUSINESS TRANSACTIONS INVOLVING INTERESTED PERSONS 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 $20,843 IN 2016. 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 $489,811 FOR REGULATORY FEES AND SERVICES IN 2016. THOMAS J. DIGANCI WAS AN EMPLOYEE OF FINRA, AND THE SON OF TODD T. DIGANCI, EXECUTIVE VICE PRESIDENT & CFO. FINRA PAID MR. THOMAS J. DIGANCI ANNUAL COMPENSATION OF $68,647 IN 2016. THERE IS NO DIRECT REPORTING RELATIONSHIP BETWEEN TODD AND THOMAS DIGANCI. 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 2016 FORM 990 SHOULD BE READ IN CONJUNCTION WITH FINRA'S 2016 ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS-FINANCIALS. SEE ALSO SEPARATE 2016 FORMS 990 FOR RELATED ENTITIES, INCLUDING FINRA REGULATION AND FINRA INVESTOR EDUCATION FOUNDATION. FORM 990, PART III, LINE 4 THE FINANCIAL INDUSTRY REGULATORY AUTHORITY, INC. (FINRA) IS A NOT-FOR-PROFIT SELF-REGULATORY ORGANIZATION (SRO) AUTHORIZED BY FEDERAL LAW TO HELP PROTECT INVESTORS AND ENSURE THE FAIR AND HONEST OPERATION OF SECURITIES MARKETS. UNDER THE SUPERVISION OF THE SECURITIES AND EXCHANGE COMMISSION (SEC), WE REGULATE THE ACTIVITIES OF U.S. BROKER-DEALERS AND PERFORM MARKET REGULATION PURSUANT TO OUR OWN STATUTORY RESPONSIBILITIES AND UNDER CONTRACT FOR CERTAIN EXCHANGES. OUR CORE MISSION IS TO PURSUE INVESTOR PROTECTION AND MARKET INTEGRITY AND WE CARRY IT OUT BY OVERSEEING VIRTUALLY EVERY ASPECT OF THE BROKER-DEALER INDUSTRY. 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. 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. 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 2016 FORM 990 ON SEPTEMBER 26, 2017. 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 AND DEFINES THE EXPECTATION OF EVERYONE WHO ACTS ON FINRA'S BEHALF. THE CODE INCLUDES A WRITTEN CONFLICT OF INTEREST POLICY THAT PRECLUDES EMPLOYEES 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 HAVE AN ONGOING RESPONSIBILITY TO REPORT CONFLICTS UNDER THE CODE AND MUST CERTIFY COMPLIANCE WITH THE CODE OF CONDUCT WITHIN 30 DAYS OF HIRE AND ANNUALLY THEREAFTER. EMPLOYEES ARE REGULARLY REMINDED OF THE RESOURCES THAT ARE AVAILABLE WHEN THEY ARE UNSURE WHAT TO DO. IN ADDITION TO TALKING TO DEPARTMENTAL MANAGEMENT, EMPLOYEES 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 AGAINST EMPLOYEES WHO REPORT SUSPECTED MISCONDUCT IN GOOD FAITH, EVEN IF THE REPORT ULTIMATELY PROVES TO BE ERRONEOUS. 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 12, 2015 AND DECEMBER 15, 2015 TO ESTABLISH INCENTIVE COMPENSATION ATTRIBUTABLE TO THE PERFORMANCE OF SERVICES DURING CALENDAR YEAR 2015 AND TO ESTABLISH BASE SALARIES FOR CALENDAR YEAR 2016. 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 12, 2015 AND DECEMBER 15, 2015 MEETINGS WERE REVIEWED AND APPROVED AS ACCURATE AND COMPLETE. THE FULL BOARD FURTHER APPROVED THE 2015 INCENTIVE COMPENSATION OF THE CEO AT ITS MEETING ON DECEMBER 15, 2015. ALL COMPENSATION COMMITTEE MEMBERS 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, COLUMN B 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, 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 1099'S 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 2016 FINRA ANNUAL FINANCIAL REPORT WHICH IS AVAILABLE AT WWW.FINRA.ORG/ABOUT/ANNUAL-REPORTS-FINANCIALS. 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