Finra disciplinary actions packed $107,000 average punch in 2018

Finra disciplinary actions packed $107,000 average punch in 2018
MAR 04, 2019

Although it brought 638 disciplinary actions last year compared with 1,007 in 2017, the Financial Industry Regulatory Authority Inc.'s fines bit deeper, averaging $107,000 per case, up from $65,000 the year before, according to analysis of Finra's disciplinary actions by the law firm of Eversheds Sutherland. Anti-money laundering cases resulted in the most fines assessed, the firm found, followed by cases involving suitability and variable annuities. (More: UBS hit with $15 million in fines, penalties for AML problems) Total fines levied by Finra — $68 million — were just slightly above the $65 million imposed in 2017, the analysis found. AML maintained its top spot for the third year in a row due in part to 2018's largest single fine of $10 million, which was assessed on Morgan Stanley. "The firm's surveillance system allegedly did not receive data from several systems, undermining its surveillance of wire and foreign currency transfers," the analysis stated. While Finra reported fewer suitability cases — 91 versus 98 — the cases resulted in $11.8 million in fines, up from $3.6 million in 2017. This pushed suitability into the top tier of issues for the first time since 2015. In connection with variable annuities, Finra reported 28 cases for a total of $8.1 million in fines, up from 23 cases and $2 million in fines in 2017. Restitution in VA cases jumped to $8.7 million from $428,000 in 2017. While total restitutions were lower — $31 million versus $67 million in 2017 — and well below the record of $96 million reported in 2015, "the decrease is less pronounced when Finra's overall monetary sanctions are analyzed," the study said, noting that in 2018, monetary sanctions (fines, restitution, and disgorgement) totaled $124 million. This compares with sanctions of $150 million in 2017, $207 million in 2016, and $193 million in 2015. (More:SEC, Finra nab two firms for AML violations) The analysis also found that many of Finra's largest fines are brought in the second half of the year, often in year-end cases. In 2018, reported fines totaled $42 million in the second half, compared to $26 million in the first half. Last year, Finra fined four firms $21 million in December alone, representing nearly one-third of the total fines for the year.

Latest News

Farther debuts AI investment proposal tool for advisors to win clients
Farther debuts AI investment proposal tool for advisors to win clients

"Im glad to see that from a regulatory perspective, we're going to get the ability to show we're responsible [...] we'll have a little bit more freedom to innovate," Farther co-founder Brad Genser told InvestmentNews.

Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler
Barred ex-Merrill Lynch advisor arrested in alleged $2.6M theft of former Miami Dolphin Pro Bowler

Former advisor Isaiah Williams allegedly used the stolen funds from ex-Dolphins defensive safety Reshad Jones for numerous personal expenses, according to police and court records.

Are you optimally efficient?
Are you optimally efficient?

Taking a systematic approach to three key practice areas can help advisors gain confidence, get back time, and increase their opportunities.

Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida
Advisor moves: Father-son duo leaves Raymond James for LPL, RayJay adds Merrill Lynch alum in Florida

Meanwhile, Osaic lures a high-net-worth advisor from Commonwealth in the Pacific Northwest.

Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B
Beacon Pointe adds six RIAs in two-month acquisition spree, boosting AUM by $2.7B

The deals, which include its first stake in Ohio, push the national women-led firm up to $47 billion in assets.

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.