FINRA's Top 5 Fine Categories in First Half of 2018

Fines issued by the Financial Industry Regulatory Authority are slightly up in the first six months of 2018 while restitution is down significantly from 2017, according to Eversheds Sutherland’s annual midyear analysis of the FINRA disciplinary actions from January through June 2018.

The law firm reviews FINRA’s monthly Disciplinary and Other FINRA Actions publications and press releases.

FINRA reported a slight increase in fines during the first half of 2018 compared with the first six months of 2017 — with $25.9 million in fines through June 2018 compared with $23.5 million reported during the same period in 2017.

Historically, FINRA’s reported fines increase significantly during the second half of the calendar year, the law firm states.

Nonetheless, if FINRA continues to assess fines in 2018 at the current rate, the year-end fines would total approximately $51.8 million, compared with $65 million in 2017.

“That would represent a 20% decrease and would be the lowest total since 2010, when FINRA ordered $42 million in fines,” Eversheds says.

FINRA’s restitution orders have been significantly down this year, Eversheds states, with the self-regulator ordering $4.9 million in restitution during the first six months of 2018, which compares with $38.1 million ordered during the same period in 2017.

“Nearly half of the restitution reported in the first six months of 2018 came from one settlement where FINRA ordered $2 million in restitution,” Eversheds said.

“Despite a small increase in fines and a decrease in restitution, we expect those figures will more than double by year end,” said Brian Rubin, head of Eversheds Sutherland’s Washington litigation practice group, in a statement. “Regardless of how 2018 finishes, however, FINRA’s emphasis on certain areas shows that firms should still concentrate on nuts-and-bolts issues like AML, trade reporting, suitability, and supervisory policies and procedures.”

As with fines, restitution generally increases during the second half of the year.

“However, if FINRA continues to order restitution in 2018 at a similar pace, the year-end restitution amount would be $9.8 million. This amount would represent an 85% decrease from the total restitution reported by FINRA in 2017 ($67 million) and a 65% decrease from 2016 ($28 million),” Eversheds reports.

Despite the slight increase in fines during the first half of 2018, the number of disciplinary actions reported by FINRA decreased compared to 2017.

FINRA reported 342 disciplinary actions during the first six months of 2018, which is a 25% decline compared to the first six months of 2017 (459 disciplinary actions).

“If FINRA continues to report cases in 2018 at the current rate, the year-end total would be 684 cases, compared to 1,369 cases in 2017.”

Read above to see the top 5 enforcement issues for FINRA during the first half of 2018 in terms of total fines.

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