Finra posts net loss of $218.1 million for 2022

investmentnews.com:

Finra posted a net loss of $218.1 million last year, primarily as a result of operating and investment losses, the regulator said.

The Financial Industry Regulatory Authority Inc.’s financial results represented a sharp drop from the $218.8 million in net income the broker-dealer self-regulator obtained in 2021.

Finra lost $166.9 million on its investment portfolio in 2022 and $60.2 million on its operations, which was offset by $9 million in interest and dividend income.

Finra revenue fell as a result of a decline in the market transactions on which Finra charges fees. There was a decrease last year in the number of public offerings and lower trading activity fees, Finra CEO Robert W. Cook and the organization’s chief financial and administrative officer, Todd T. Diganci, wrote in a letter accompanying theFinra annual report, which was posted on the Finra website Friday afternoon.

The report also indicates that the total amount of fines Finra imposed on member brokerages dropped to $54.5 million in 2022 from $103 million in 2021. The 2022 fine amount includes disgorgement of $6.4 million. Finra returned $26.2 million to harmed investors last year.

The organization’s expenses increased due to costs related to its 3,900-person staff. Total expenses were $1.4 billion in 2022, up from $1.3 billion in 2021. Most of the cost was related to compensation and benefits, which rose from $802.5 million in 2021 to $870 million in 2022. The second largest expense category was cloud computing and software, which increased to $242 million last year from $189 million in 2021.

“The increase in our operating expenses was driven in part by investments in staff and technology to strengthen our capabilities to fulfill long-standing