• The National Association of Securities Dealers (NASD) was the principal self‑regulatory organization (SRO) for broker‑dealers in the United States from 1939 until 2007.
– It was created under the Maloney Act amendments to the Securities Exchange Act of 1934, helped found and regulate the NASDAQ market, administered securities licensing exams, and ran the industry’s Central Registration Depository (CRD).
– In 2007 NASD’s regulatory functions merged with the New York Stock Exchange’s regulatory arm to create the Financial Industry Regulatory Authority (FINRA), which continues most NASD functions today.
– Practical steps below explain what investors, registered representatives, and firms should do now to verify registration, prepare for licensing, comply with rules, and resolve disputes.
Understanding the NASD — what it was and why it mattered
– Purpose: The NASD was a self‑regulatory organization formed to set standards for broker‑dealers, oversee market conduct, operate over‑the‑counter (OTC) markets (including early NASDAQ operations), administer qualification exams, and discipline industry participants. It operated under the oversight of the U.S. Securities and Exchange Commission (SEC).
– Legal basis: The NASD was established in 1939 pursuant to the Maloney Act (1938 amendments to the Securities Exchange Act of 1934), which authorized creation of SROs for brokerage firms.
– Core activities:
• Market oversight (notably NASDAQ market operations in later decades),
• Licensing and testing of securities professionals (for example, historically administering the Series 7 exam),
• Registration and recordkeeping through the CRD (Central Registration Depository),
• Rule writing, examination, enforcement, and arbitration of disputes.
Short history and timeline
– 1938–1939: Maloney Act amendments provide statutory basis; NASD is formed (1939).
– 1971: NASD is a leading founder of the NASDAQ stock market and responsible for much of its market operation and regulation.
– 1939–2007: NASD oversees broker‑dealer conduct, administers exams and the CRD, and enforces industry rules under SEC oversight.
– 2007: NASD merges with the regulatory, enforcement and arbitration functions of the New York Stock Exchange to form the Financial Industry Regulatory Authority (FINRA). FINRA succeeds NASD as the primary SRO for U.S. broker‑dealers.
NASD vs. FINRA — what changed (and what stayed the same)
– Continuity: FINRA inherited most of NASD’s regulatory responsibilities — oversight of brokerage firms and registered representatives, operation of the CRD, licensing exams (now run by FINRA), and industry enforcement and arbitration services.
– Consolidation: The 2007 merger unified regulatory resources previously split between NASD and the NYSE’s regulatory unit, intended to produce more consistent oversight across markets.
– Oversight: Like NASD, FINRA operates as a non‑governmental SRO but is subject to SEC supervision and rule review.
Key legacy functions that persist under FINRA
– Broker and firm registration and records (CRD hasunder FINRA administration).
– Licensing and exams (Series exams, continuing education requirements).
– Enforcement and discipline for broker‑dealers and registered reps.
– Arbitration and mediation for disputes between customers and industry participants (FINRA arbitration now the primary forum).
– Market surveillance and rulemaking to promote fair dealing and investor protection.
Practical steps — what investors, brokers, and firms should do today
For investors
1. Verify a broker or firm’s registration and disciplinary history:
• Use FINRA BrokerCheck to search by name or firm and view registration, employment history, licenses, and disclosures.
2. Review public filings and customer complaints:
• Look at the CRD summary on BrokerCheck and any pending or settled arbitration or enforcement actions.
3. Understand dispute options:
• If you have a complaint, consider FINRA arbitration/mediation (info at , which is typically faster and less expensive than litigation.
4. Keep records:
• Maintain trade confirmations, account statements, communications, and account opening documents to support any complaint.
For individuals preparing for licensing or already registered representatives
1. Determine required exams:
• Identify which Series exams are needed for your intended role (e.g., Series 7 for general securities representatives, Series 6, Series 3, etc.). See FINRA’s exam guides .
2. Register through your sponsoring firm:
• Most exams and CRD registrations require a sponsoring broker‑dealer or investment firm.
3. Prepare for continuing education:
• Complete FINRA continuing education (CE) requirements and maintain compliance with firm supervision and reporting obligations.
4. Monitor your CRD profile:
• Review your public and non‑public CRD records periodically and promptly update employment or disclosure information.
For broker‑dealers and compliance officers
1. Maintain accurate CRD filings:
• Ensure timely updates to Form U4/U5 filings, firm disclosures, and financial reporting requirements.
2. Implement robust supervisory systems:
• Adopt written supervisory procedures (WSPs), regular compliance reviews, and training programs to meet FINRA rules (previously NASD rules).
3. Prepare for exams and audits:
• Be ready for FINRA examinations; keep books and records in order and respond promptly to requests.
4. Manage dispute risk:
• Establish complaint handling processes and consider alternative dispute mechanisms (mediation) before arbitration.
For those involved in disputes (investors or brokers)
1. Understand FINRA arbitration process:
• File a claim with FINRA, exchange pleadings, participate in discovery, attend hearing, and await award. FINRA provides rules and timelines: .
2. Consider costs and remedies:
• Arbitration has fees and is generally binding; remedies may include restitution, rescission or damages depending on claim.
3. Seek counsel when appropriate:
• Consult an attorney or a representative experienced in securities arbitration for complex cases.
Impact and legacy
– The NASD helped professionalize and standardize broker conduct, testing, registration and market oversight for decades. Its consolidation into FINRA centralized SRO responsibilities and created today’s primary private regulator of the broker‑dealer industry. Many rules, systems (CRD) and practices originated with NASD and remain core to securities regulation and investor protection.
Authoritative sources and further reading
– Investopedia — National Association of Securities Dealers (NASD):
– FINRA — About FINRA:
– FINRA — BrokerCheck:
– FINRA — Arbitration & Mediation:
– U.S. Securities and Exchange Commission — Self‑Regulatory Organizations:
– SEC — History of the SEC and legislation (Maloney Act context)
Bottom line
The NASD was the leading self‑regulatory organization for U.S. broker‑dealers from 1939 until its 2007 consolidation into FINRA. Its responsibilities for licensing, registration, market oversight, enforcement, and arbitration largely continue under FINRA today. Investors and industry participants should use current FINRA tools (BrokerCheck, CRD records, arbitration resources) to verify registrations, manage compliance, and resolve disputes.