As you may know, the Financial Industry Regulatory Authority (FINRA) is a self-regulating association that conducts investigations into its members with regard to securities law compliance. FINRA oversees disciplinary actions for its broker-dealer members who violate FINRA rules or SEC regulations.
FINRA’s activities include holding hearings, investigating firms for alleged violations, and creating a disciplinary framework for ordering fines and remediation. Here are some current trends in FINRA disciplinary actions:
- FINRA’s reported penalties for 2019 showed a 28% reduction from 2018 ($61 million in 2018 and $44 million in 2019).
- There were also fewer cases involving “supersized fines” ($1 million or more). In 2019, there were nine such fines that came to a total of $27.9 million, while in 2018 there were 13 supersized fines that came to $47 million.
- In 2019, there was only one fine of $5 million or more, whereas there were five such large fines in 2018.
- 2019 saw 591 disciplinary actions, 7% fewer than the 638 of 2018.
- Of those disciplinary actions, FINRA barred 198 individuals, compared to the 211 barred in 2018.
- Four firms were expelled by FINRA in 2018, and three were expelled in 2019.
To put all of this in perspective, consider that FINRA ordered record-setting fines in 2016, with those fines totaling $174 million. Since then, the year-over-year trend has been a reduction in fines.
If your brokerage is under investigation for FINRA or SEC violations, contact an attorney with extensive experience in civil and criminal cases involving allegations of securities fraud. At Ford O’Brien, we advise and represent clients in New York and nationwide.
Source: Think Advisor, “FINRA’S Top 5 Fine Categories in 2019,” March 6, 2020