Fines levied by the self-regulator of securities firms were approximately $135 million in 2014, an increase of 125 percent from the prior year.
Fines imposed last year by the Financial Industry Regulatory Authority for violations of regulations more than doubled from the previous year despite a decrease in the number of cases, according to an analysis of Finra actions by Sutherland, Asbill and Brennan LLP, a Washington, D.C., law firm.
Fines levied by the self-regulator of securities firms were approximately $135 million in 2014, an increase of 125 percent from the $60 million in fines imposed last year. This is despite a decrease in the number of cases for the same period. According to the analysis, 1,397 disciplinary actions were filed in 2014, a decrease of nine percent from the 1,535 cases the regulator initiated in 2013.
This was the largest amount of fines imposed by Finra since the financial crisis. Fines have increased by 382 percent since Finra reported assessing $28 million in fines in 2008, according to Sutherland.
In addition to the $135 million in fines, Finra also ordered firms and their representatives to pay approximately $52 million in restitution in 2014, a new record for the organization, and an increase of 420 percent from 2013’s $10 million.
The number of firms expelled by Finra declined from 24 in 2013 to 18 in 2014, a decrease of 25 percent.
However, the number of individuals suspended rose in 2014 to 705 from 670 in 2013, an increase of 5 percent. And the number of individuals barred rose from 429 in 2013 to 481 in 2014, an increase of 12 percent.
This is the second year in a row where the number of firms that were expelled decreased significantly, but the number of individuals suspended or barred increased.
Research analyst and research report cases received the most fines, according to Sutherland’s analysis. This was partially driven by one $15 million fine, Finra’s largest in 2014, which resulted from allegations that Citigroup failed to supervise the communications of its equity research analysts with clients and the firm’s sales and trading staff during a nine-year period.
Advertising cases resulted in the second-highest amount of fines in 2014, as 31 cases resulted in $17.2 million in total fines. This increase of 514 percent, from $2.8 million last year was largely attributed to the $15 million Citigroup case, which also involved allegations about improper promotions at IPO road shows.