FINRA Increased Fines, Actions Against Financial Firms in 2012: Study

The non-governmental regulatory authority used to police the financial industry increased disciplinary action against financial firms last year and hit them with heavier fines than the previous year, according to a new report. 

An analysis by Sutherland Asbill & Brennan LLP found that the Financial Industry Regulatory Authority (FINRA) brought 4% more disciplinary actions in 2012 against financial firms than it did in 2011. It also levied 15% more in fines than the year before.

FINRA oversees all securities firms doing business in the United States, providing arbitration services for claims against stock brokers and serving to protect investors by making sure the securities industry operates fairly and honestly.

According to the analysis, FINRA issued 1,541 disciplinary actions in 2012, and collected $78.2 million in fines. That’s compared to only 1,488 actions in 2011 to the tune of $68 million.

The number of disciplinary actions last year was the highest in its history, and the fine amounts were the largest since 2006.

When it came to restitution for investors, FINRA ordered companies to pay out $34 million in 2012. That is an 80% increase from the $19 million paid out in 2011. Still, that is only 1.3% of the $2.63 billion in assets controlled by brokers in the financial industry.

FINRA was created in July 2007 as a successor to the National Association of Securities Dealers, to arbitrate stock broker fraud claims that can include charges of breach of contract, breach of fiduciary duty, negligence, misrepresentation, unauthorized trading and other claims that investments were improperly handled.

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