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March 11, 2022 at 11:10 AM
Related: FINRA’s Top 5 Fine Categories in 2020
Fines reported by the Financial Industry Regulatory Authority in 2021 increased to $91 million from $57 million in 2020, a 60% increase, according to just-released data from the law firm Eversheds Sutherland.
This “dramatic bump” represents the highest total fines since 2016 when FINRA ordered $174 million in fines, said Brian Rubin, co-head of the firm’s Securities and Exchange Commission, FINRA and state securities enforcement practice, and Adam Pollet, partner in the practice.
Without FINRA ordering Robinhood Financial in June to pay a record-setting $57 million in fines and $12.6 million in restitution for years-long systemic supervisory failures and significant harm suffered by millions of its customers, FINRA’s fines in 2021 would have been $34 million, a decline of more than 40% compared with 2020, the two attorneys state.
The two attorneys compiled their report by studying FINRA’s monthly disciplinary reports, press releases and online database.
“Last year, the amount of fines and restitution increased significantly from the previous year, indicating that FINRA’s enforcement program is as robust as ever,” Rubin said.
The number of cases reported by FINRA remained mostly flat last year. FINRA reported 569 disciplinary actions in 2021, a 6% decrease from the 602 disciplinary actions in 2020, and a decrease of 4% from the 591 disciplinary actions in 2019, Eversheds said.
While FINRA did not bring any cases related to Regulation Best Interest or Form CRS in 2021, “it appears that the regulators are lacing up their gloves,” Rubin and Pollet state.
To date, the SEC has brought 42 cases against firms for failing to timely provide customers Form CRS, and in some instances, failing to provide certain required information, the two said.
FINRA “has signaled that it is ready to enter the ring,” the two state. For the past two years, FINRA has included Reg BI and Form CRS in its examination and risk monitoring report.
Read the galley above to see FINRA’s top 5 enforcement issues for 2021, measured by total fines assessed, as compiled by Eversheds Sutherland.
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