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FINRA Sanctions Shows Number of Fines Jump by 15%

Wednesday, April 10, 2013

Sutherland Asbill & Brennan recently released an analysis of the 2012 FINRA disciplinary actions. The analysis shows an increase in enforcement actions and fines. Total actions increased for the fourth year in a row. FINRA filed 1541 actions last year as compared to 1488 in 2011. This is the fourth consecutive year that enforcement actions have increased. Total fines increased by a much greater margin from $68 million in 2011 to $78.2 Million in 2012.

Sutherland identified the top enforcement issues (based upon total fines) as suitability, due diligence especially of complex products and alternative investments, research reports, advertising, and exchange-traded funds, especially inverse and leveraged ETFs. Each of these categories had fines ranging from $7.6 million to $19.4 million.

Sutherland also identified the following FINRA enforcement trends and areas of focus: supersized fines of more than $1 Million, complex product cases, electronic communication, and Auction Rate Securities.