In 2015, FINRA secured $96.2 million in restitution, nearly triple the $32.3 million it did in 2014, evidencing the regulator’s push to be more aggressive in returning money to investors ripped off by brokerages over the past year.
“They are clearly exercising more of their ability to aggressively seek the range of sanctions,” said attorney and former FINRA vice president and head of regional enforcement Daniel Nathan. “It goes beyond simple fines. It’s more about investor protection.”
The total amount of fines ordered by FINRA on its member firms in 2015 is projected to be $93.9 million, down from $134 million in 2014. That difference can be attributed in large part to a $43.5 million fine in December 2014 for cases centering on research analysts. Experts believe the FINRA fine level is on an upward trajectory despite the decline from 2014 to 2015.
“Even though the total fines are far lower than last year, they are much higher than they had been during the prior several years, when FINRA assessed fines in the $50 million to $70 million range,” said attorney Brian Rubin.
FINRA revised its sanctions guidelines last spring to put more teeth into penalties. In addition, it is looking more at systemic sales practice violations, according to Nathan. Both moves mean firms will pay more for violations.
“The general trend is focused on a ratcheting upward of fines, and that is likely to continue,” Nathan said.
FINRA conducted 1,462 disciplinary actions in 2015, up from 1,397 in 2014. The regulator also referred 804 cases to the Securities and Exchange Commission and other federal agencies for litigation or prosecution, up from 730 in 2014.
FINRA is trying to strengthen its enforcement muscle by working more with other regulators. “The level and extent of cooperation between FINRA and other agencies, including U.S. attorneys offices, is substantially more robust and extensive than in prior years,” said attorney Dennis Stubblefield.
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