Compliance Digest Excerpt: FINRA Fines Decline in 2015

COMPLIANCE DIGEST EXCERPT – While FINRA fines have steadily increased over the past few years, it appears that tradition is set to expire. According to recent analysis by Sutherland Asbill & Brennan, during the first half of 2015, FINRA reported $37.5 million in fines from monthly disciplinary actions, compared to the $42.2 million reported in the first half of 2014. If FINRA continues to assess fines at the current rate, the year-end fines would total $75 million, a 44% decrease from the $135 million reported in 2014.

Despite this seemingly steep decline, a projected fine total of $75 million would still be the second highest amount of fines imposed by FINRA since the financial crisis. FINRA also reported six “supersized fines” fines of $1 million or more during the first half of 2015, totaling $17.8 million. While significant, it doesn’t quite stack up to the five “supersized” fines reported in the first half of 2014, totaling $20.4 million.

Despite the significant drop-off in fines issued in 2015, the number of disciplinary actions reported only decreased slightly compared to 2014. FINRA reported 553 disciplinary actions during the first six months of 2015, which is less than a 1% decline compared to the first six months of 2014 (558 disciplinary actions).

According to Sutherland, the top enforcement issues for FINRA during the first half of 2015, in terms of the total fines reported in FINRA’s monthly disciplinary actions, were:

       (1) Trade Reporting: $7.6 million in fines (72 cases)
       (2) Short Selling: $4.2 million in fines (21 cases)
       (3) Anti-Money Laundering: $2.4 million in fines (20 cases)
       (4) Best Execution: $2.3 million in fines (25 cases)
       (5) Suitability: $2.2 million in fines (30 cases)

To serve as a reminder, the top enforcement issues for FINRA during the first half of 2014, in terms of the total fines reported in FINRA’s monthly disciplinary actions, include:

        (1) Books and Records: $13.7 million in fines (61 cases)
        (2) Anti-Money Laundering: $11.3 million in fines (17 cases)
        (3) Net Capital: $9.7 million in fines (18 cases)
        (4) Unregistered Securities: $9.2 million in fines (11 cases)
        (5) Trade Reporting: $6.7 million in fines (92 cases)

To read the complete Sutherland report, click here.

To view Quest CE’s course catalog, for training on each of the mentioned fine categories, click here.