Finra uses fine proceeds of $48.1 million to help fund improvements

Finra uses fine proceeds of $48.1 million to help fund improvements
The money from fines, along with funds from its reserves and excess operating revenue, allowed the regulator to finance $111.4 million in projects to improve its examination and enforcement efforts.
MAY 31, 2023

Finra allocated the money it collected in fines last year, totaling $48.1 million — augmented by funds from its reserves and operating revenue — to bolster its examination and enforcement efforts, the broker-dealer self-regulator announced Wednesday.

In its annual report on the use of its fine proceeds, the Financial Industry Regulatory Authority Inc. said that it collected $48.1 million in fines in 2022. But the organization determined there was a total of $111.4 million in projects that could be funded with fine monies, such as capital initiatives, investor education and reserves replenishment.

Finra dipped into its reserves — or investment accounts — and excess operating revenue to add $63.3 million to its $48.1 million in fines to finance the total $111.4 million in spending tied to fine collections.

The $111.4 million total was split in two ways. The regulator spent $89.2 million on capital initiatives to upgrade technology and data management to improve Finra’s oversight of member brokerages and their compliance with Finra rules. The other $22.2 million was allocated to investor education.

The $52.2 million spent on examinations and enforcement capital initiatives included $17.5 million to build a centralized data services and analytics platform. Another $17.1 million was invested in tools and systems to improve investigations of brokers with a history of misconduct. Other spending in this pool was targeted at digital aspects of enforcement and on risk monitoring.

Additional capital spending included more than $16 million to enhance Finra’s monitoring of market trading and $13.4 million to improve its compliance filing systems.

“The fines-eligible expenditures … furthered Finra’s goals to implement efficient oversight programs that protect investors and the markets; modernize critical securities industry infrastructure; strengthen the ability to track trading across markets; enhance examination, investigation and disciplinary programs; enhance the efficiency of Finra systems; facilitate compliance by member firms; equip investors with knowledge and resources to help them navigate ever-evolving markets, products and services; and expand training to ensure staff is prepared for new regulatory challenges,” Finra said in the report on how it spent fine proceeds.

Finra has issued the fine-spending report annually since 2017. It was originally published as part of the Finra 360 initiative to make the organization’s finances more transparent.

Market crosscurrents have high-net-worth investors playing defense

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.