Senator Elizabeth Warren is pressing the nation’s broker-dealer regulator, Finra, on its claim that success in kicking bad actors out of the industry explains why enforcement numbers have plummeted in recent years.
Fines levied by the Financial Industry Regulatory Authority have dwindled to half their recent levels, and the number of enforcement actions last year was the lowest in history, Bloomberg News reported in June. The regulator attributed the decline to improved rules and strategies to weed out repeat offenders.
“The new report appears to indicate that the decline in enforcement is part of a deliberate deregulatory effort,” Warren said in a letter to Finra, a private self-regulatory organization that’s funded by its members.
The Massachusetts Democrat said the enforcement slowdown coincided with the so-called Finra 360 program, launched seven years ago to make the regulator more “effective and efficient.”
That effort saw the integration of two different enforcement divisions at the markets watchdog. It was intended to streamline investigations and information sharing and “enable the organization to vigorously and fairly enforce applicable rules,” Finra spokesperson Ray Pellecchia said in an email.
Warren asked Finra to explain what policy changes were made as a result of that initiative.
“Any suggestion that FINRA360 had the effect of reducing the number of enforcement actions is just dead wrong,” Pellecchia said, adding that such allegations would carry more weight if the industry wasn’t continuing to blast Finra’s enforcement moves.
Industry executives have complained the regulators’ enforcement function “is inflicting unnecessary and excessive costs and uncertainty,” Ann Wagner, a Missouri Republican and senior member of the House Financial Services Committee, said at a December hearing.
Finra barred 3,640 individuals and expelled 130 firms from its membership between 2014 and 2023, according to Pellecchia. Those expulsions included high-risk firms as well as associated individuals who had been the subject of multiple disciplinary actions, moves that would help explain the decline in enforcement actions, Pellecchia said.
“Other high-risk firms withdrew from our membership following considerable regulatory attention,” Pellecchia said. During that period, the regulator’s enforcement actions resulted in $377.9 million ordered to be returned to harmed investors, he said.
Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.
From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.
"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.
Chair also praised the passage of stablecoin legislation this week.
Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
