Originally published in the Journal of Investment Compliance, September 2012.
Purpose - The paper’s aim is to describe a recent increase in FINRA enforcement activity and to discuss how broker-dealers and representatives may want to prepare themselves for FINRA’s increasing willingness to sanction members in the wake of the recent financial crisis. Design/methodology/approach - The paper analyzes FINRA’s recent enforcement record, including trends over the past several years in disciplinary actions and fines. It also discusses FINRA’s top enforcement issues in 2011; advertising, short selling, auction rate securities, and suitability; and recommends increased compliance efforts in light of FINRA’s growing aggressiveness.
Findings - It is important that firms and representatives understand how the priorities of this self-regulatory organization have changed since the financial crisis, fueling this recent growth in FINRA enforcement activity. Originality/value - The paper offers practical guidance from experienced financial services lawyers.
Keywords - Financial institutions, United States of America, Enforcement, Broker dealer, Registered representative, Law enforcement.
Paper type - Technical paper.
After a substantial decline in FINRA enforcement activity in the years immediately preceding the recent financial crisis, broker-dealers (BDs) and registered representatives are faced with a potentially daunting new reality: an active regulator that is bringing a lot more cases and imposing a lot more fines. Since 2008, the number of disciplinary cases filed by FINRA annually has jumped nearly 39 percent and the fines levied have increased by 143 percent.
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