Legal Alerts

FINRA on a Fines Frenzy!


Beware Member Firms! There has been a recent spike in enforcement activity at the Financial Industry Regulatory Authority (FINRA) against broker-dealers and their associates, as the independent regulator is on track to significantly increase the number of fines and disciplinary actions it is assessing compared to that of previous years.In 2011, FINRA collected $68 million in fines.Already, in the first half of 2012, the fines levied approximate $39.4 million (from 609 disciplinary actions), which includes FINRA’s growing trend of issuing “super fines” that by definition exceed $1 million.3 If FINRA maintains this pace, the number of fines assessed by year-end 2012 will be approximately $78.4 million, which represents a 15% increase in the volume of fines FINRA collected in 2011.

What is causing this spike? According to the study, there are two primary reasons. First, some of the disciplinary actions stem from the economic collapse. Second, it is believed that FINRA is setting an example of being a “tougher” watch dog, particularly after the Bernard Madoff and Allen Standford scandals, and also to help build its case that it should be granted expanded enforcement authority and oversee investment advisors.       

In one extreme example, on July 31, 2012, FINRA expelled Biremis, Corp., formerly known as Swift Trade Securities USA, Inc. FINRA’s investigation revealed that during various periods from June 2007 to June 2010, the company failed to establish a supervisory system reasonably designed to achieve compliance with applicable laws and regulations prohibiting manipulative trading activity, failed to implement an adequate anti-money laundering (AML) program to comply with the Bank Secrecy Act, failed to properly detect suspicious activities and file suspicious activity reports (SARs), and violated a number of securities laws. The investigation was conducted by the Departments of Market Regulation and Enforcement.

1 Information obtained from a recent study by the law firm Sutherland & Asbill and Brennan.   
2 This figure represents a 51% increase from the number of fines assessed in 2010. 
The majority of this figure is comprised of a $11.9 million penalty FINRA assessed against Goldman Sachs for improper practices and communications improprieties of its research- analysts.  After Goldman Sachs, the top categories of violations include suitability concerns (64 cases totaling $6.6 million); unit investment trusts (4 cases totaling $3.9 million); and actions involving markups or markdowns (14 cases totaling $3.7 million). 

Search Tips:

You may use the wildcard symbol (*) as a root expander.  A search for "anti*" will find not only "anti", but also "anti-trust", "antique", etc.

Entering two terms together in a search field will behave as though an "OR" is being used.  For example, entering "Antique Motorcars" as a Client Name search will find results with either word in the Client Name.


AND and OR may be used in a search.  Note: they must be capitalized, e.g., "Project AND Finance." 

The + and - sign operators may be used.  The + sign indicates that the term immediately following is required, while the - sign indicates to omit results that contain that term. E.g., "+real -estate" says results must have "real" but not "estate".

To perform an exact phrase search, surround your search phrase with quotation marks.  For example, "Project Finance".

Searches are not case sensitive.