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September 06, 2013 at 03:34 AM
Financial Industry Regulatory Authority fines are on track to hit a three-year low in 2013 — likely down 41% from the dollar amount assessed last year. But disciplinary actions have only fallen slightly this year.
During the first half of 2013, FINRA reported $23 million of fines in its monthly Disciplinary and Other FINRA Actions report, according to the law firm Sutherland Asbill and Brennan. In contrast, during the first half of 2012, FINRA reported fining broker-dealers and associated persons $39 million, and it assessed fines of $78 million for all of 2012.
Brian Rubin, head of Sutherland’s securities litigation and enforcement group, says that sanctions are likely dropping because “FINRA has likely brought most of its significant cases related to the market crisis.” In addition, he noted that “FINRA has brought far fewer ‘supersize’ fines, which is what we call fines of $1 million or more.”
During the first six months of 2012, FINRA reported seven supersize fines, totaling $24 million. Only two such fines, totaling $2.25 million, had been published in FINRA’s monthly disciplinary reports through June 2013, Sutherland reported.
Indeed, Sutherland says that if FINRA continues at the current rate, this year’s fines will fall 41% from the total fines reported by the regulator in 2012, down to an estimated $46 million from $78 million. That would be the lowest total since $45 million in fines were imposed in 2010.
Despite the dramatic drop in the size of fines, the number of cases reported by FINRA during the first half of the year was nearly identical to the period a year ago.
The top five enforcement issues for FINRA during the first half of 2013, in terms of the total amount of fines reported in Disciplinary and Other FINRA Actions, were:
1. Municipal securities: $4.3 million, 25 cases
2. Electronic communications: $2.5 million, 27 cases
3. Mutual funds: $2.1 million, 18 cases
4. Suitability: $1.7 million, 31 cases
5. Short selling: $1.5 million, 16 cases
