FINRA, the self-regulatory organization for the financial services industry, is doing very well financially.
Net income for the industry-funded Financial Industry Regulatory Authority soared in 2014 to $129 million from $1.7 million in 2013. The gain was largely due to an increase in revenues coupled with a decline in expenses. Revenues rose 10.6% to $996.6 million from $900.7 million. Expenses fell 3.4% to $964.8 million from $998.9 million.
“Financially, 2014 was a strong year for FINRA due primarily to an increase in revenue and our continued efforts to control costs,” wrote Chairman and CEO Richard Ketchum in a letter released along with the annual report.
As a result of the big increase in operating earnings, FINRA gave back a total $20 million to member firms. All active firms in good standing received a $1,200 rebate to offset their minimum Gross Income Assessment Fee. Firms also received a rebate based on their prorated share of regulatory fees paid to FINRA.
FINRA’s revenues rose as a result of increased fines and gains (realized and unrealized) in its trading portfolio.
FINRA collected more than $132 million from 645 fines and ordered restitution of more than $32 million to investors who had been harmed. The amount of fines more than doubled from the year before though the number of fines fell. The average fine in 2014 was roughly $206,000, up sharply from $80,000 in 2013. Altogether, FINRA brought 1,397 disciplinary actions against registered individuals and firms in 2014.