Small B-Ds still get plenty of FINRA’s ire as actions against firms fall, attorneys say

Senior executives with small broker-dealers, or those with 150 or fewer registered representative salespeople, have often expressed a common frustration with FINRA, the primary regulator for the retail securities industry.

Those small firm executives for years have privately expressed their concern that FINRA targets their businesses, which lack the resources or clout to fight back, in enforcement actions.

Like any police force, FINRA needs to keep up its number of tickets – in the regulator’s case, enforcement actions – it writes each year to prove its efficiency, those executives will argue.

That thinking has some validity, according to a recent tally and analysis of FINRA’s 2025 enforcement actions, with FINRA filing 103 formal disciplinary actions against small firms, a 27% increase from 2024.

At the same time, FINRA’s number of cases against broker-dealers is, overall, in decline, according to the analysis, which was posted last week on the website of the law firm CSG Law.

“FINRA’s 2025 disciplinary statistics reflect a significant reining-in of FINRA’s enforcement program,” according to the analysis. “As compared to 2024, FINRA filed 127 fewer formal disciplinary actions, a drop-off of about 23%.”

"There most certainly has not been a 90% increase in formal actions against small firms in the 2020-2025 period," a FINRA spokesperson wrote in an email Tuesday to InvestmentNews. "Our analysis indicates a far more modest increase in small firm formal actions from 2020 to 2025."

Mid-sized broker-dealers are defined as those with 151 to 499 registered reps and large firms are those with 500 or more representatives. 

“There could be legitimate reasons for the increase in formal actions against small firms but there’s long been a perception by small firms that they get treated more harshly by FINRA,” said Lisa Colone, CSG Law’s chair, securities enforcement practice group leader. “These statistics bolster that perception, particularly as it has been over a series of years.”

Colone is a former chief counsel of FINRA’s department of enforcement.

There are approximately 150 large firms under FINRA’s watch while small firms make up the overwhelming number of firms, more than 2,900.

But large firms account for the bulk of registered reps working as salespeople in the industry.

“The number of formal disciplinary actions filed against large firms dropped by more than 30%,” when comparing 2025 to the prior year, according to the CSG Law article.

“Perhaps more troubling for small firms, this increase appears to be part of a larger pattern,” according to the article. “2025 marks the fourth year in a row that FINRA has increased, year over year, the number of formal actions filed against small firms.”  

“In fact, since 2020, the number of formal disciplinary actions FINRA filed against small firms increased more than 90%, while the number of formal disciplinary actions filed against large firms decreased roughly 32% during this same period,” the article states.

“While one can debate whether these statistics reflect a concerted effort by FINRA to target small firms, one thing is for sure—small firms should be aware of this trend and prepared to defend themselves vigorously against FINRA in the new year,” the article states.

This article was updated Wednedsay morning to include the comment from FINRA.