Firms have fighting chance with FINRA

B-Ds facing litigation from FINRA might be better off fighting rather than settling, according to a study.
SEP 27, 2007
By  Bloomberg
Broker-dealer firms facing litigation from FINRA may have a chance at beating the charges, provided they fight rather than settle, according to a study from Sutherland Asbill & Brennan LLP. When taken to court by FINRA, the 67 polled firms won 22% of their cases outright. It doesn’t sound like much, but even those that lost were able reduce FINRA’s proposed sanctions 55% of the time. “Many firms and registered representatives fear litigating against FINRA because its staff has often spent months or even years investigating the conduct,” said Brian L. Rubin, partner of Washington-based Sutherland Asbill & Brennan, in a statement. “Our study continues to show that it often pays for member firms to litigate, rather than settle. Firms that step up might walk away with a little more money in their pockets—even if they don’t win. About 70% of the time, respondents convinced the panel to order fines that are less than what the staff demands. In turn, the penalties were reduced by 40%. In one case, FINRA staffers pushed for a fine of either $28 million or $98 million. Instead, the hearing panel, comprised of two current or former industry members and one FINRA employee, charged the firm a $5 million fine. Respondents were also able to convince the hearing panel to reduce suspensions 56% of the time. Those who were successful had their suspension periods trimmed by 63%, from an average of 9.2 months to 3.4 months. However, the fight is less promising for respondents who appealed decisions to the Securities and Exchange Commission: They lost 71% of the time.

Latest News

SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

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.