Finra restitutions more than doubled in 2017, disciplinary actions study finds

The Financial Industry Regulatory Authority Inc. reported restitutions of approximately $66 million in 2017, an increase of 136% from the $28 million reported in 2016, according to a study conducted by the law firm of Eversheds Sutherland. Still, the 2017 total was below the record of $96 million reported in 2015, the firm said Fines reported by Finra last year decreased 58% to $73 million from the record-setting total of $176 million in 2016. The 2017 fines were also 22% lower than the $94 million in fines reported in 2015. Still, fines have increased by 161% since 2008, when Finra assessed $28 million in fines, the study found. (More: Finra 2018 regulatory and exam priorities) The number of very large fines also declined. Finra assessed 15 fines of $1 million or more last year, in contrast to 2016, when it assessed 34 fines of that size. Overall sanctions — a combination of fines, restitution and disgorgement — also declined, to $150 million. The total was $207 million in 2016, $193 million in 2015, and $168 million in 2014. Although the overall sanctions in 2017 were lower than in recent years, they were still higher than in any of the years from 2008 through 2013, the firm said.

The number of disciplinary cases reported by Finra also decreased last year, to 1,008 from 1,201 in 2016, a drop of about 16%. The number of individuals barred declined as well, dropping from 517 in 2016 to 214 in 2017, a 59% decrease. The number of individuals suspended decreased from 727 to 413, a 43% decline, and the number of firms expelled decreased from 24 to six, a 75% decrease. The top Finra enforcement issues for 2017 measured by total fines assessed were:

• Anti-money laundering cases, which resulted in $14.6 million in fines from 16 cases (down 68% from fines of $45.9 million from 32 cases in 2016); • Trade reporting cases, up from No. 3 last year, with $14.3 million in fines from 112 cases, compared to fines of $24.4 million and 146 cases in 2016 • Electronic communications cases, which resulted in $8.3 million in fines for 44 electronic communications cases (versus $13.6 million in fines and 69 cases reported in 2016); • Books and records cases, which resulted in $6.2 million in fines from 81 cases, versus $22.5 million in fines from 99 cases in 2016; and • Research analyst and research report cases, which resulted in $6 million in fines from 10 cases, down from $13.8 million in fines from 13 cases in 2016. (More: Finra updates sanction guidelines to address financial exploitation of clients)