With the Financial Industry Regulatory Authority Inc. facing political pressure and lawsuits questioning the constitutionality of its enforcement authority, some in Washington are questioning whether the brokerage industry’s self-regulatory organization will survive in the future.
Not so fast, said one prominent securities attorney, Adam Pollet, partner, Eversheds Sutherland.
In the firm’s annual report on Finra fines, Pollet noted that Project 2025 - a Heritage Foundation white paper - calls for the abolishment of Finra, stating it has “proved to be ineffective, costly, opaque, and largely impervious to reform” and that it should be abolished and its “regulatory functions should be merged into the SEC.”
“In the absence of abolishing Finra, Project 2025 makes numerous proposals about how Finra should be changed, such as making Finra more transparent, simplifying and streamlining regulations and reducing the regulatory burden,” according to the report, which is titled “2024 Finra Sanctions Study.”
Pollet, however, argues that Finra will manage to stand up to the current pressures its under.
“Despite these constitutional and political challenges to Finra and its enforcement program, it’s highly unlikely that Finra will be abolished over the next four years, even if litigants or politicians are successful in curtailing certain practices or having the SEC more closely supervised Finra,” Pollet wrote in the report.
A Finra spokesperson did not comment by deadline about the statements in the “2024 Finra Sanctions Study.”
The US Court of Appeals for the District of Columbia issued the first successful blow to Finra enforcement power in Alpine Securities Corp.’s ongoing lawsuit against it.
According to Bloomberg News, a panel sided with Alpine Securities 2–1 on November 22, finding that Finra’s expedited proceeding against the broker-dealer would allow Finra to expel Alpine with no opportunity for SEC review, which likely violates the private non-delegation doctrine.
Meanwhile, Finra’s fines against the brokerage industry declined in 2024 when compared to a year earlier, according to the report.
“The fines reported by Finra in 2024 decreased to $59 million from $89 million in 2023, a 35% decrease,” the report noted. “The fines in 2023, however, included a single $24 million fine against one firm,” BofA Securities Inc.
“Without that one large fine, 2023’s total fines would have been $65 million, or 10% more than 2024,” according to the report.
And while the total amount of fines were down year-over-year, Finra was busier on the enforcement front.
“The number of cases reported by Finra increased last year, after declining for eight consecutive years according to Finra Statistics,” the report noted. “Finra reported 552 disciplinary actions in 2024, a 22% increase from the 453 disciplinary actions it reported in 2023.”
In an era of AI euphoria and market FOMO, getting back to basics with fixed income may be the most contrarian and most important move advisors can make.
Voya Financial adds private equity, credit and real estate options to its AMA program, building on support for looser federal investment rules in retirement accounts.
Shannon Reid, president of Osaic and the network’s number two executive, has plenty of challenges, industry executives said.
Auditors flagged the commingling. The COO allegedly knew. Investors kept getting the pitch
The advisors on the move include two brothers leading a family practice in Connecticut, and a husband-and-wife tandem working with business owners in the West Coast.
Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income
Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.
