FINRA Goes Heavy on the Fines

“As the mid-year review states, the projected increase in FINRA fines and disciplinary actions represents a trend, with increases in fines over the last four years,” Miller said.

He said most NAIFA members are community-based small business owners, who provide affordable insurance and financial services to the middle-income market. He also noted that NAIFA members “are also some of the most comprehensively regulated individuals in the financial services industry.”

Miller said that NAIFA “believes the best way to protect consumers from bad actors is through strong and effective supervision within financial services firms, and regular, periodic inspections.”

At the same time, Miller said that FINRA needs to be mindful of the impact increased costs could have on NAIFA members and on consumers.

“If the cost of doing business rises significantly, NAIFA members would have little choice but to pass some of those costs on to their clients or to discontinue some of the affordable services they typically provide to middle-market consumers,” Miller said.

Other findings of the Rubin/ Heilizer survey was that FINRA has also been more aggressive in ordering “supersized” fines – fines of at least $1 million.

During the first half of the year, it ordered seven “supersized” fines totalling $24 million, the Sutherland survey found. Rubin and Heilizer said that if this trend continues, “supersized” fines will increase from the 10 “supersized” fines in 2011, which totaled $35 million. 

Another finding was that during the first half of 2012, FINRA has also ordered its members to pay $12.7 million of disgorgement and restitution payments.