The biggest penalties FINRA levied last came from a wide variety of violations:
The Puerto Rico bond crisis was the source of a couple substantial FINRA actions. The regulator fined UBS Financial Services Inc. of Puerto Rico $7.5 million and ordered restitution of $11 million to 165 customers who had bought Puerto Rican closed-end fund shares. In a similar action, the regulator made Santander Securities pay $4.3 million in restitution and levied a $2 million fine.
Mutual Fund Charges
Overcharging for mutual funds was at the center of numerous big FINRA cases. The regulator ordered Wells Fargo Advisors to pay $15 million in restitution to customers because it failed to waive mutual fund sales charges for charitable and retirement accounts. In similar actions, Edward D. Jones & Co. paid $13.5 million in restitution, while Raymond James Financial Services Inc., LPL Financial, Stifel Nicolaus & Company Inc. and Janney Montgomery Scott paid $8.7 million, $6.3 million, $2.9 million and $1.2 million, respectively.
FINRA ended the year by ordering Barclays Capital Inc. to pay more than $10 million in restitution and levying a $3.75 million fine for suitability violations related to mutual fund sales.
FINRA targeted enforcement actions on LPL Financial multiple times in 2015. In May, the regulator fined LPL $10 million for supervisory failures related to the sales of complex products, such as nontraditional exchange-traded funds, variable annuities and nontraded real estate investment trusts. It also made LPL pay $1.7 million in restitution to customers for the violations.
FINRA cracked down on Oppenheimer & Co. for failing to corral a rogue broker, Mark Hotton. The regulator fined Oppenheimer $2.5 million and ordered it to pay $1.25 million in restitution to Hotton’s customers. He was barred from the industry in 2013.
FINRA has been putting an emphasis on cybersecurity and technology management over the last year. In November, it fined Scottrade Inc. $2.6 million for failing to maintain electronic records and retain email messages.
Another area of FINRA concern is firm liquidity. In late August, the regulator slapped a $2 million fine on Charles Schwab & Co. for net capital deficiencies and the supervisory breakdowns that allowed them to occur.
FINRA also brought trading cases against firms. In May, it fined Morgan Stanley & Co. $2 million for violating rules regarding short-interest reporting and short sales.
Complex products are a FINRA priority. In April, it fined RBC Capital Markets $1 million and ordered the firm to pay $434,000 in restitution for unsuitable sales of reverse convertibles.
FINRA started 2015 with a high-profile action against a well-known rogue broker, when it expelled John Thomas Financial and barred the firm’s chief executive, Anastasios “Tommy” Belesis, from the industry. FINRA ordered the firm and Belesis to pay $1.047 million to customers.
In March, FINRA sanctioned Brookville Capital Partners for sales violations involving private placement securities. The firm was fined $500,000 and ordered to pay $1 million in restitution.
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