Finra fines spike 63% in 2023: Report

investmentnews.com:

The Financial Industry Regulatory Authority Inc. went back to carrying a big stick last year as the fines it imposed on brokerage firms reached $89 million, a 63 percent increase compared to $54.5 million in 2022, according to a new report by the law firm Eversheds Sutherland.

The top five enforcement issues as measured by total fines were: spoofing, which made its first appearance ever on this annual list; trade reporting; anti-money laundering; Regulation Best Interest; and suitability, according to the report, which was co-written by firm partners Brian L. Rubin and Adam C. Pollet.

The increase in the dollar amount of fines came as both the number of disciplinary actions and orders of restitution again declined compared to the previous year, according to the report.

2016 was a record year for fines at Finra, topping out at $175 million, causing executives in the retail securities industry to gnash their teeth in despair. But 2016 was the same year that Robert Cook took over as Finra’s CEO, and he immediately struck a more conciliatory tone with Finra’s constituency of broker-dealers, whose ranks have been decreasing for more than a decade and currently number more than 3,300.

Under the Cook regime, fine have leveled off to between $40 million and $70 million per year, noted Pollet, one of the authors of the report.

“Last year saw bigger Finra fines per case,” Pollet said in an interview Wednesday morning. “Supersized fines, or those of $1 million or more, were up, and mega-sized fines, or those of $5 million and more, increased too.”

The 2023 fines included a single $24 million fine against one firm, as BofA Securities Inc. was penalized for more than 700 instances of spoofing,

Two former employees of the bank