FINRA Fines Expected to Drop 41% in 2013

Even though the number of disciplinary actions from the Financial Industry Regulatory Authority has dropped just slightly this year, fines paid to the SRO are expected to be 41% lower from what was assessed in 2012.

In its Disciplinary and Other FINRA Actions report for the first half of 2013, FINRA said there were $23 million of fines—compare that to the same time period last year when the SRO fined brokerage firms and associated individuals $39 million. The total in fines it would assess for 2012 would reach $78 million. This year’s total is estimated to reach $46 million.

One reason for the decline might be that FINRA had already brought its biggest cases related to the market collapse. A decrease in supersize fines of those over $1 million has also occurred during the year’s first six months. However, in July, the SRO reported fining a financial firm $7.5 million while another had to pay investor restitution of $1.5 million. Supersize fines were also imposed on other broker-dealers.

ThinkAdvisor lists the leading five enforcement issues for FINRA for the first half of this year (figures were reported in Disciplinary and Other FINRA Actions): municipal securities, with 25 case at $4.3 million; electronic communication, with 25 cases at $2.5 million; mutual funds with 18 cases at $21 million; suitability, with 31 cases at $1.7 million; and short selling, with 16 cases at $1.5 million.

FINRA is the biggest independent regulator of securities firms in the US—4,215 broker-dealers (and their branches) and about 633,620 brokers. It is here to protect investors and ensure market integrity.

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FINRA Fines On Track to Fall 41% This Year, ThinkAdvisor, September 6, 2013

Financial Industry Regulatory Authority

US Securities and Exchange Commission

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