Did 2016’s heavy-handed FINRA fines (a record amount totaling $176 million) scare the industry straight? Perhaps—at least to some degree. Both the amount of the fines and number of cases assessed by the Financial Industry Regulatory Authority (FINRA) fell in 2017, according to Eversheds Sutherland’s annual analysis of reported disciplinary actions. There was a drastic dip in the number of individuals barred and firms expelled, too.
In a review of FINRA’s monthly disciplinary reports, press releases and online database, fines reported amounted to $73 million, a 58 percent decrease from a year earlier. Not to be taken lightly, however, this figure is the fourth highest when compared to the last 10 years of data.
Reported disciplinary actions dropped to 1,008—down about 16 percent from 1,201 in 2016. Additionally, there was a 59 percent decline in the number of individuals barred (214 in 2017 compared to 517 a year earlier) and a 75 percent reduction in firms expelled (6 in 2017 compared to 24 a year earlier).
“Last year, FINRA’s fines predictably decreased after 2016’s record-setting year, but the amount of restitution ordered increased, demonstrating that FINRA is interested in getting money back into the pockets of investors,” Brian L. Rubin, Eversheds Sutherland (US) partner and co-author of the analysis, said in a statement.
Restitution, in fact, more than doubled according to the analysis. FINRA ordered approximately $66 million to be paid back to investors last year, whereas 2016’s restitution amount totaled just $28 million. The 2017 sum turns out to be the second highest in 10 years of data collection, only falling short of $96 million reported in 2015.
“FINRA addressed an array of topics in 2017, continuing its focus on anti-money laundering, while also pursuing more ‘nuts and bolts’ issues like trade reporting, record retention, and supervisory policies and procedures,” Rubin said.
Other key trends to note from the analysis, aside from the significant restitution spike, included crackdowns on suitability and technological issues.
Jessa Claeys is a writer, editor and graphic designer.
