Finra brought fewer enforcement actions in '08; fines against individuals fell as well

As the stock market plummeted in 2008 and chaos reigned on Wall Street, Finra regulators found less reason to levy fines and enforcement actions against broker-dealers and their registered reps, according to a study.
JUN 03, 2009
As the stock market plummeted in 2008 and chaos reigned on Wall Street, Finra regulators found less reason to levy fines and enforcement actions against broker-dealers and their registered reps, according to a study. Last year, which was the first full year of existence for the Washington and New York-based Financial Industry Regulatory Authority Inc., saw fines against firms and individuals plummet, decreasing 55% to $35 million in 2008. That’s compared to $77.6 million in fines in 2007, when the former NASD and NYSE Regulation merged enforcement and arbitration operations, according to the report, “Finra 2008: An Oscar Winning Year?” But that doesn’t mean Finra is going soft, according to the report, which warns that“2008 may have been the calm before the storm.” Given the current financial crisis, it is likely that Finra’s enforcement activity will increase in 2009.” The report released this morning was prepared by Deborah Heilizer and Brian Rubin, partners in Washington with Sutherland Asbill & Brennan LLP, along with Shanyn Gillespie, an associate with the firm. Finra was tackling fewer “blockbuster” issues and cases that resulted in far fewer fines of more than $1 million, according to the report. In 2008, Finra levied three such supersized fines, compared with 19 a year earlier. “The reduction in blockbuster cases with outsized fines may be due, in part, to the industry’s adoption of policies and procedures in response” to major issues that surfaced in 2005, such as market timing, late trading, directed brokerage, revenue sharing and mutual fund share class issues,” the report said. “It is also possible that Finra is no longer rulemaking by enforcement,” it said. “Finally, Finra may have been affected by the SEC’s well-publicized retrenchment on the enforcement front.” The top-five issues that Finra focused on in 2008 in terms of fines were: mutual funds, suitability, licensing, excessive brokerage compensation and electronic communications, according to the report. For the full story, see the upcoming June 8 issue InvestmentNews.

Latest News

Judge OKs more than $90 million in settlement money for GWG investors
Judge OKs more than $90 million in settlement money for GWG investors

Mayer Brown, GWG's law firm, agreed to pay $30 million to resolve conflict of interest claims.

Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs
Fintech bytes: Orion and eMoney add new planning, investment tools for RIAs

Orion adds new model portfolios and SMAs under expanded JPMorgan tie-up, while eMoney boosts its planning software capabilities.

Retirement uncertainty cuts across generations: Transamerica
Retirement uncertainty cuts across generations: Transamerica

National survey of workers exposes widespread retirement planning challenges for Gen Z, Millennials, Gen X, and Boomers.

Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future
Does a merger or acquisition make sense for your firm? Why now is the perfect time to secure your firm’s future

While the choice for advisors to "die at their desks" might been wise once upon a time, higher acquisition multiples and innovations in deal structures have created more immediate M&A opportunities.

Raymond James continues recruitment run with UBS, Morgan Stanley teams
Raymond James continues recruitment run with UBS, Morgan Stanley teams

A father-son pair has joined the firm's independent arm in Utah, while a quartet of planning advisors strengthen its employee channel in Louisiana.

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.

SPONSORED Beyond the dashboard: Making wealth tech human

How intelliflo aims to solve advisors' top tech headaches—without sacrificing the personal touch clients crave