Eversheds Sutherland has completed its annual study of the disciplinary actions reported by the Financial Industry Regulatory Authority (FINRA) in 2022. By reviewing FINRA’s monthly disciplinary reports, press releases and online database, Partners Brian L. Rubin and Adam C. Pollet found that in 2022 fines and restitution decreased significantly compared with 2021, in large part because of one record-breaking fine FINRA ordered in 2021 against an online brokerage firm. Additionally, the number of disciplinary actions declined for the third year in a row.
The Results
Fines, Restitution and Disciplinary Actions
The fines reported by FINRA in 2022 decreased to $45 million from $103 million in 2021, a 56% decrease. However, the fines in 2021 included a single, record-setting $57 million fine against one firm. Without that one large fine, FINRA’s fines in 2021 would have been $46 million, which would have resulted in only a 2% decrease from 2021 to 2022.
In contrast, the number of cases with very large fines increased in 2022. FINRA assessed 11 fines of $1 million or more (what we call “supersized” fines) in 2022, compared with eight such fines in 2021. In 2022, FINRA assessed two fines of $5 million or more (what we call “mega” fines). In 2021, FINRA assessed one mega fine (the record-setting $57 million case).
In contrast, the number of cases with very large fines increased in 2022. FINRA assessed 11 fines of $1 million or more (what we call “supersized” fines) in 2022, compared with eight such fines in 2021. In 2022, FINRA assessed two fines of $5 million or more (what we call “mega” fines). In 2021, FINRA assessed one mega fine (the record-setting $57 million case).
In 2022, the amount of restitution ordered by FINRA also decreased substantially. FINRA ordered restitution of approximately $21 million, which was down 55% from the $47 million in restitution ordered in 2021. A main driver in this decline in restitution was the reduction of “supersized” restitution orders ($1 million or more). In 2022, FINRA ordered only three supersized restitution orders, totaling approximately $17 million, while in 2021, there were ten supersized restitution orders, totaling approximately $42 million.
As a result, the total monetary sanctions ordered by FINRA (fines, restitution and disgorgement) in 2022 were $72 million. This represents a 52% decrease from the $150 million in total sanctions ordered in 2021.
Finally, the number of cases reported by FINRA decreased last year. FINRA reported 463 disciplinary actions in 2022, a 13% decrease from the 534 disciplinary actions in 2021 and a 17% decrease from the 560 disciplinary actions in 2020.
(This news/press release has not been altered by investment.net, apart from the headline, and has been obtained from a syndicated source:- https://insurancenewsnet.com/innarticle/analysis-of-finra-disciplinary-actions-shows-decrease-in-sanctions-and-cases)