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Regulation and Compliance > Federal Regulation > FINRA

FINRA’s 5 Biggest Fine Categories in 2015

By Melanie Waddell

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Overall sanctions imposed by the Financial Industry Regulatory Authority, including fines and restitution, increased 14% in 2015, jumping to $190 million in 2015 from $166 million in 2014, according to the law firm Sutherland Asbill & Brennan.

The overall sanctions imposed by FINRA increased significantly in 2015 due to $96 million of restitution the self-regulator reported, according to Sutherland’s annual analysis of the disciplinary actions filed by FINRA.

The amount of restitution ordered by FINRA tripled in 2015 while the number of cases also increased for the first time since 2012. Restitution reached a new record for FINRA, increasingf 200% from the $32 million ordered in 2014.

The number of firms expelled by FINRA jumped from 18 in 2014 to 25 in 2015, an increase of 39%, the study notes.

The number of individuals suspended increased from 705 in 2014 to 737 in 2015, an increase of 5%, while the number of individuals barred increased slightly from 481 in 2014 to 492 in 2015, a 2% increase.

FINRA imposed fines of approximately $94 million in 2015, a decrease of 30% from the $134 million in fines the regulator reported in 2014. Despite the decrease, “it was still the second-largest amount of fines imposed by FINRA since the financial crisis,” the study notes. Fines have increased by 236% since FINRA assessed fines of $28 million in 2008. 

“This was FINRA’s biggest year since the financial crisis and firms and their representatives should take notice,” said Brian Rubin, a Sutherland partner. “The amount of fines and restitution ordered by FINRA has increased significantly during the last two years and the regulator does not appear to be slowing down.”

According to Sutherland’s report, the following are the top FINRA enforcement issues for 2015 measured by total fines assessed: 1. Trade reporting cases resulted in the most fines for FINRA in 2015. This is the third year in a row that trade reporting has been on Sutherland’s Top Enforcement Issues list.

2. Anti-money laundering was a key enforcement issue for FINRA for the second year in a row. FINRA reported 36 AML cases in 2015, which resulted in $20.6 million in fines. The number of cases increased by 6% from 34 in 2014 to 36 in 2015, but the fines reported jumped 56%.

3. Suitability cases have historically been a top enforcement issue for FINRA, but suitability actions did not make the list in either 2013 or 2014. However, they came back in a big way in 2015. FINRA reported 76 suitability cases in 2015, which resulted in $18.3 million in fines. This was a 227% increase from the $5.6 million in fines reported in 2014, but the number of cases barely changed from the 75 reported in 2014. In addition to significant fines, 2015 suitability cases also resulted in $28 million in restitution, a 1,117% increase from the $2.3 million imposed in 2014 suitability cases.

4. Forms U4, U5 and 3070 cases resulted in substantial fines in 2015. FINRA reported 154 cases involving Forms U4, U5 and 3070 allegations, which resulted in $13 million in fines. These figures represent a 16% increase from the 133 cases reported in 2014 and a 665% increase from the $1.7 million in fines reported in 2014. This substantial increase was largely driven by a $10 million widespread supervision case involving allegations that a firm failed to timely file or amend more than 100 Forms U4 or U5.

5. Advertising cases. FINRA reported 36 advertising cases in 2015, which totaled $11.8 million in fines, an increase of 16% from the 31 cases reported in 2014 and a decrease of 31% from the $17.2 million in fines reported in 2014. Advertising cases have frequently been a key enforcement focus for FINRA in recent years.

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