Financial Industry Regulatory Authority (Finra) President and CEO Robert W. Cooke took a $40,000 pay cut in 2020, earning $3.12 million, down from $3.16 million in 2019, Finra reported Friday. That’s despite the huge uptick in fines levied by Finra in 2020.

Finra’s total fines increased by $17.5 million in 2020 to $57 million, up from $39.5 million in 2019, according to Finra’s 2020 Annual Financial Report.

As for compensation for Finra’s remaining top four executives, Todd Diganci, Finra's chief financial officer, saw his income drop by a hefty $1.1 million in 2020. He earned $1.5 million, a significant decline from the $2.6 million he received in 2019.

Finra’s three remaining highly-compensated executives all received increases in 2020:

• Steven Randich, chief information officer, earned $1.36 million in 2020 versus $1.35 million in 2019.
• Robert Colby, chief legal officer, earned $1.24 million in 2020 versus $1.16 million in 2019.
• Bari Havlik, head of member supervision and chief of exams, earned $1.3 million in 2020 versus $1.1 million in 2019.

“As part of its compensation philosophy, Finra has determined that its competitive compensation positioning for all employees should be considered primarily against a broad section of financial services and capital market companies, as this is the most likely sector from which Finra will recruit talent, and that would recruit talent away from the company,” Finra’s Compensation Committee said.

The regulator reported that it performed 5,623 exams and reviews last year, issued $25.2 million in restitution to harmed investors, expelled two firms, suspended 375 brokers and barred 246.

Net income is up at the regulator, with Finra reporting net income of $19.8 million in 2020 versus a net loss of $45.9 million in 2019, an increase of $65.7 million year over year.

“The organization’s 2020 net income was driven by operating income of $30.9 million, offset by other expenses, net of investment gains, of $11.1 million,” Cook said. “Higher operating income for the year reflected increased revenues, due primarily to higher trading volumes and a large number of public offerings, partially offset by an increase in operating expenses and lower interest and dividend income.”

Finra’s balance sheet “remains strong” with $1.5 billion in equity as of December 2020, added Cook, a former partner with the law firm of Cleary Gottlieb in Washington, D.C., and a director of the Division of Trading and Markets at the Securities and Exchange Commission, who took the helm at Finra in 2016.

The self-regulator oversees the processing of some 79.7 million market events on average every day, Finra said.

In addition to fining broker-dealer firms and registered persons $39.5 million in 2020, Finra also referred 970 fraud and insider trading cases referred to the SEC and other federal or state law enforcement agencies for prosecution. “Coordinating closely with the SEC and other federal and state regulators is an important part of our regulatory work,” Finra said.

The regulator also “assisted with the return of more than $7.7 million to [senior] investors,” Finra said. Calls to Finra’s Securities Helpline for Seniors soared in 2020. The hotline received more than 21,000 calls from all 50 states and several countries, with Finra officials making more than 1,600 referrals to state, federal and international regulators. The hotline was launched in 2015 to assist senior and vulnerable investors with questions or concerns about their brokerage accounts and investments, Finra said.

The self-regulator does not plan to raise fees in 2021, “the eight consecutive year we have not increased fees,” Cook said. Instead, Finra will “continue to strategically draw down on excess reserves in order to support Finra's operations, while phasing in a delayed fee increase over several years,” he added.