Supersized fines are the next big thing in regulatory enforcement.
FINRA sanction fines jumped from a reported $60 million in 2013 to $135 million in 2014, while the number of disciplinary actions dropped. Restitution to customers and others shows a quadruple increase from 2013 to 2014 going from $10 million to $52 million. What happened?
Research, Analysis and Reporting: Cases against firms and individuals in this area spiked for 2014 with over $59 million in fines against 19 cases. The most significant difference was fines increased 5800%, from just $1 million in 2013; $15 million of which was against 1 firm.
Advertising: The second highest category with 31 cases and $17 million in fines was in advertising. Notably, the number of cases for advertising dropped by 40% while fines increased 514%; marking advertising as an important compliance issue as new products are brought to market.
Best Execution: Best execution is not just an ethical issue; it is the law. Still, best execution cases were cited as the 3rd largest category of fines at $14 million, an increase in 112% from 2013. Broker firms can expect more emphasis on these transactions in forthcoming audits.
Anti-Money Laundering: The AML landscape shows a slight decrease in AML cases between 2013 and 2014. This would be good news; however fines increased from $5 million to $8 million. AML is expected as another hot trending audit area for 2015.
Trade Reporting: Slowing down on the trend chart are trade reporting cases; showing a slight dip in cases initiated and an 8% decrease in fines. The high focus for trade reporting cases however still shows precedence that FINRA does not tolerate administrative and technical mistakes.
RND Resources Inc – Litigation Support | Our litigation support services are built around qualified, experienced professionals with the skills you need to handle regulatory & legal challenges. We can assist with investigations and testimony around securities regulation.
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