FINRA Earnings Rise as Fines Soar

After reporting a sizeable loss in the prior year, the Financial Industry Regulatory Authority says it had a better 2016.

The nonprofit regulatory group reported net income of $57.7 million, according to its recent financial report, versus a loss of $39.5 million in 2015. It pointed to two factors for the improved results: fines and portfolio returns.

“An increase in fines revenue more than offset the decrease in operating revenues for the year, while portfolio returns, including interest and dividend income, increased $70.9 million year over year,” the group explained in its report.

Despite a roughly 10% drop in the number of monetary sanctions to 624 in 2016, the overall level of fines soared 85% to $173.8 million. The group also ordered firms and advisors to pay $27.9 million in restitution to investors last year.

Still, FINRA’s operating revenues fell 6% in 2016 to $844.6 million.

This decline, said President and CEO Robert W. Cook in the group’s report, was caused by “changes to the scope of regulatory functions provided under regulatory services agreements, lower corporate financing fees due to a decline in the number of filings for initial and secondary public offerings, and a decline in continuing education fees following the transition to a lower-fee online delivery format — which was designed to reduce costs and increase convenience for our members.”

As for 2017, Cook adds that FINRA expects “challenges to continue this year, with a projected decline [in operating revenue] of 1%.”

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