Fines doled out by the Financial Industry Regulatory Authority jumped 60% to $91 million from $57 million in 2020, although the bulk of the increase came from a single case, according to a report by Eversheds Sutherland Partners Brian Rubin and Adam Pollet.

The increase represents the highest total in fines since 2016, when Finra ordered $174 million in fines, the report said. But it noted that the dramatic bump from 2020 was mainly due to a single, record-setting $57 million fine Finra levied against Robinhood Financial LLC in June. The firm also was fined $12.6 million in restitution for alleged years-long systemic supervisory failures and significant harm suffered by millions of its customers, the report noted.

Had it not been for that one large fine, Finra’s fines in 2021 would have been $34 million, a decline of more than 40% compared with 2020, the report said.

Despite the increase in fines, there was a slight decrease in the number of cases with large fines in 2021. There were eight “supersized” fines of $1 million or more totaling $71 million, the report said. In 2020, there were 10 “supersized” fines, totaling only $39 million. “Similarly, in 2021, Finra assessed one fine of $5 million or more (what we call a “mega” fine)—the record-setting $57 million fine. In 2020, two cases resulted in mega fines (totaling $22 million),” the report said.

Restitutions also saw a big jump in 2021. Finra ordered about $49 million in restitutions, with the total driven in large part by one case with restitution of about $12.6 million, the report noted. That’s an increase of 96% from the $25 million in 2020. Barring that case, restitution still saw a significant jump of more than 45%, the report said. The growth was in part due to restitution orders of $1 million or more, of which there were 10, totaling nearly $42 million.

The total monetary sanctions in fines, restitution and disgorgement in 2021 were $144 million, a 53% increase from $94 million in total sanctions ordered by Finra in 2020 and the highest total sanctions ordered since 2017, the report said.

As in 2020, the number of cases reported by Finra remained mostly flat last year. There were 569 disciplinary actions in 2021, a 6% decrease from the 602 disciplinary actions reported in 2020 and a 4% decrease from the 591 disciplinary actions in 2019. “Cases against only firms (as opposed to cases against individuals or jointly against both firms and individuals) were 20%, decreasing from 23% during 2020,” the report noted. 

The following are the top Finra enforcement issues for 2021 measured by total fines assessed:

• Anti-money laundering (AML) cases, which resulted in 16 cases in 2021, totaling  $4.6, compared with 14 cases, totaling $16.2 million in 2020. This is the sixth consecutive year that AML has been at the top of the Eversheds Sutherland Top Enforcement Issues list and the eighth consecutive year that AML has appeared on the list.
• Unit Investment Trust (UIT) cases resulted in the second most fines for Finra in 2021, making the list for the first time. Finra reported five UIT cases in 2021, with $3.9 million in fines and $10.9 million in restitution. The number of cases decreased slightly from the six cases brought in 2020, while fines and restitution increased significantly from $325,000 and $1.3 million, respectively.
• Suitability cases resulted in the third most fines for Finra in 2021. Suitability cases last appeared on the list in 2019. Finra reported 54 suitability cases, with $3.9 million in fines in 2021. The number of cases increased 29% from 42 cases brought in 2020, while fines increased 109% from $1.9 million. Finra also ordered $7.3 million in restitution in suitability cases, a decrease from the $9.9 million ordered in 2020.
• Trade reporting cases resulted in the fourth most fines for Finra in 2020. This marks the second consecutive year that trade reporting cases have been on the list. Finra reported nine trade reporting cases, with $3.4 million in fines in 2021. The number of cases decreased 74% from the 34 cases brought in 2020, and the fines decreased 51% from $7 million reported in 2020.
• Municipal securities cases resulted in the fifth most fines for Finra in 2021. Municipal securities have not appeared on the list since 2019. Finra reported seven municipal securities cases, with $3 million in fines in 2021. The number of cases remained flat compared with 2020, while fines increased significantly from $355,000.