The Financial Industry Regulatory Authority brought 44 formal actions involving violations of Regulation Best Interest in 2025, exceeding the number of cases brought in previous years, Tina Salehi Gubb, a senior vice president of enforcement legal at FINRA, said Wednesday.
Actions brought in 2025 involved 51 respondents — 19 firms and 32 individuals. FINRA brought 38 Reg BI cases in 2024 and 21 in 2023.
Reg BI is a "really big topic," William Thompson, vice president of enforcement at FINRA, added on the panel with Gubb at FINRA's annual conference in Washington. The regulator continues to focus on the key "bread and butter" Reg BI-related issues that keep coming up, Thompson said.
One is churning and excessive trading, Thompson said. This activity "has a real material impact on retail investors, including senior investors, where they're seeing their accounts depleted through the charging of excessive fees, having excessive transaction fees on their accounts."
These actions are brought under Reg BI's care obligation as well as the compliance obligation, "as firms aren't conducting supervision to ensure that accounts are not churned excessively," Thompson relayed. "This is a matter where we've had a number of recent settlements; we also have a number of matters in litigation involving churning and excessive trading by individuals and where firms are involved from a supervisory standpoint."
As to how Reg BI enforcement has evolved over the past year, Matt Minerva, vice president, enforcement legal at FINRA, added on the panel that the regulator now focuses more on account type recommendations, "which can implicate both" the care and compliance obligation.
Last year FINRA brought its first failure to supervise Reg BI related action "in the account type space," Minerva said.
In that case, "associated persons of a firm recommended to over 400 brokerage customers that they open a new type of account that not only charged commissions but also had an asset under management fee for certain financial planning services," Minerva said.
"The problem was that those same customers were already receiving those financial planning services by virtue of other accounts that they already held at the firm," Minerva continued. As part of the resolution of the matter, "the firm was required to pay restitution to those customers of nearly $600,000 in unnecessary fees and costs." The firm was also fined $100,000.
FINRA found that the firm offered no guidance to its reps to evaluate how to make recommendations of these particular accounts, Minerva added, "and also provided no procedures to supervisors when evaluating these recommendations."
Also, within the past nine months, FINRA has brought three Reg BI cases charging violations of the care obligation where brokers had recommended option strategies that were not in the customers' best interest, Minerva said.
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