It might pay for broker-dealers and registered representatives to fight back when the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) launch a disciplinary action against them.

According to a study by the law firm Sutherland Asbill & Brennan LLP, of the 86 charges litigated by the SEC and FINRA during the year ended September 30, 2008 (the SEC's fiscal year), firms and reps got charges dismissed 16% of the time. The dismissal rate was higher among SEC cases (19%, or five out of 26) than FINRA cases (16%, or nine out of 60).

Both the SEC and FINRA can bring enforcement cases against B-Ds and registered reps. SEC cases are tried before an administrative law judge who's independent of the commission. FINRA cases go before a hearing panel with two current or former industry members and one current FINRA staffer.

The study finds that fraud charges brought by regulators aren't slam dunks because they have to prove that the accused acted with bad intent. The SEC failed to prove fraud in 22% of cases versus 33% for FINRA.

On the monetary front, respondents to SEC charges convinced the judge to lower the fines 83% of the time. The average proposed penalty was roughly $750,000; the average imposed penalty in contested cases was $245,000, or 67% less.

For FINRA respondents, the success rate in reducing fines was roughly 50%, and the average imposed penalty of $13,000 was nearly half the average proposed penalty.

Why does the SEC appear to be more lenient when it comes to doling out fines? "It could be that the SEC staff realizes that hearing panels cut into sanctions more, so they ask for more than the case is really worth," says Brian Rubin, a partner in Sutherland's Washington, D.C. office and a member of the firm's securities regulatory group. "Whereas FINRA's staff may more accurately assess what the case is worth and ask for that at trials."