Fines doled out by the Financial Industry Regulatory Authority in 2019 continue a downward trend from the record-setting year in 2016, when the agency ordered $174 million in fines. The fines reported by Finra in 2019 decreased 28%, to $44 million from $61 million in 2018, according to a report.
The annual report by Eversheds Sutherland (US), a global law firm which provides legal services to the world's largest corporate firms, said the amount of restitution ordered by Finra and the number of cases also slid in 2019. But Finra continues to target specific areas such as anti-money laundering violations, which for the fourth year in a row resulted in the largest amount of fines, the report noted.
With the overall reduction in fines, the number of cases with very large fines also declined in 2019. Finra assessed nine fines of $1 million or more, totaling $27.9 million. In contrast, in 2018, Finra assessed 13 such fines, totaling $47 million.
Similarly in 2019, Finra assessed just one fine of $5 million or more. In contrast, in 2018, five cases resulted in such fines. Yet the largest single fine in 2019 ($15 million) was $5 million more than the largest single fine in 2018, the report noted.
In 2019, the report said, restitution ordered by Finra decreased slightly. Finra ordered restitution of about $24 million in 2019, a decrease of 8% from the $26 million in restitution ordered in 2018 and well below the record of $97 million ordered in 2015.
As a result of these decreases in 2019, the total monetary sanctions ordered by Finra (fines, restitution, and disgorgement) were $70 million, significantly less than the $124 million in 2018, the report noted.
There also was a drop in the number of cases reported by Finra last year. The agency reported 591 disciplinary actions in 2019, a decrease of 7% from the 638 disciplinary actions in 2018. The percentage of cases against firms (as opposed to cases against individuals or jointly against both firms and individuals) declined to 18% from 25% during 2018.
Finra also showed a decrease in the number of individuals barred or suspended and the number of firms it expelled in 2019 compared with 2018. A total of 198 individuals were barred in 2019, a 6% decrease from the 211 reported in 2018. The number of firms expelled by Finra decreased from four in 2018 to three in 2019. And the number of individuals suspended decreased from 254 in 2018 to 245 in 2019.
But Finra continued to target areas such as anti-money laundering in 2019. There were 12 anti-money laundering cases in 2019, resulting in $17.4 million in fines, compared to 17 cases, totaling $27.3 million in fines, in 2018, the report said. Anti-money laundering violations maintained the top spot due in part to the largest single fine ($15 million) FINRA assessed in any case in 2019, the report said.
Coming in second with the most fines for Finra in 2019 were ETF cases. Finra reported 13 ETF/ETP cases, with $3.5 million in fines, in 2019. The number of cases increased 30% from the 10 cases brought in 2018, while fines increased by 218% from $1.1 million reported in 2018. ETF/ETP cases were driven in large part by one case where Finra fined a firm $2.9 million.