At the halfway point of the year, the Sutherland Asbill firm has issued its report on FINRA’s fines to date.  That report reflects that, although fines are on a record pace this year, the number of actions by FINRA is behind pace.  So what does this mean? 

The first step is to look at the top enforcement issues to date.  In descending order, the top issues are: 

  1. Books and recordspointing.jpg
  2. Anti-money laundering
  3. Net capital
  4. Unregistered securities
  5. Trade reporting

 Even though these may not be the sexiest issues that FINRA addresses, it tells you something.  FINRA, at least this year, is focusing on technical issues that may have broader market or customer implications, such as books and records, net capital and anti-money laundering.  At the same time, the focus on unregistered securities could mean a heightened focus on Reg D offerings.   

The fact that the fines are larger than last year also reflects that FINRA may be primarily focused on larger cases.  This is not to say that FINRA is not focused on the more garden-variety enforcement actions as it has in the past; just that it is going fishing for bigger fish this year. 

This dubious top five list should serve as an alert to all member firms.  Have you reviewed your rules and procedures on these areas of focus?  If not, you should because you may need to tighten up your procedures.  FINRA appears to be looker for bigger cases; don’t let your firm be among them.

* photo from freedigitalphotos.net