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Financial Advisors Beware: FINRA Fines Are on the Rise

Simms Law, P.C. June 14, 2022

It was recently revealed that the Financial Industry Regulatory Authority, Inc. (FINRA) imposed higher fines on financial advisors and member firms in 2018 than it did in 2017. Surprisingly, this increase in fine amounts was accompanied by a decrease in the actual number of disciplinary actions, with the number of disciplinary actions decreasing from 1007 in 2017 to 638 in 2018. Specifically, the average 2018 fine amount was $107,000 per case, which was a $42,000 increase over the previous year’s average fine amount of $65,000. Below is some additional information concerning FINRA’s fine increases.

  • FINRA reported less suitability cases in 2018 than in 2017. 91 suitability cases were reported in 2018, and 98 were reported in 2017. However, the total amount of such fines was higher in 2018 than 2017. Suitability case fines equaled $11.8 million in 2018, which was a $3 million increase over the 2017 amount.

  • FINRA reported 28 variable annuities cases for a total of $8.1 million in fines in 2018. This was significantly more than the 23 cases and $2 million in variable annuity fines reported the previous year.

  • The total amount of restitution payments in 2018 was $31 million, and the total amount in 2017 was $67 million. However, both of these amounts are below the record of $96 million reported by FINRA in 2015. This decrease is not as impactful, though, when considered in conjunction with FINRA’s overall sanction amounts, which were $124 million in 2018 and $150 million in 2017. FINRA’s overall fines in 2018 totaled $68 million, which was slightly higher than the $65 million amount imposed in 2017.

  • FINRA’s cases with the highest fines were those involving money laundering. Suitability and variable annuities cases constituted the next-highest fines.

  • FINRA’s highest fines were imposed during the second half of 2018, as its second-half fines totaled $42 million, which was almost double the amount of its first-half fines. In fact, FINRA imposed fines of $21 million in December of 2018 alone, which is an amount that represents nearly one-third of the total fines for 2018.

Fort Lauderdale Financial Advisor Representation

At Simms Law, P.A., we have a reputation in the industry for honesty, integrity, and aggressiveness, and one of our primary areas of practice is the representation of financial advisors who’ve been treated unfairly by their clients. Our representation of financial advisors covers a wide range of issues, including the expungement of disclosures through FINRA expungement proceedings, compensation issues, raiding-related claims, and matters pertaining to the successful transition from one firm to another. If you are a financial advisor and need aggressive and experienced legal representation in Fort Lauderdale or elsewhere in the state of Florida, please contact us by phone or through one of the contact forms on our website to schedule a free consultation.