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FINRA Restitution To Investors Tripled To $96.2M Last Year

In 2015, FINRA secured $96.2 million in restitution, nearly triple the $32.3 million it did in 2014, evidencing the regulator's push to be more aggressive in returning money to investors ripped off by brokerages over the past year. “They are clearly exercising more of their ability to aggressively seek the range of sanctions,” said attorney and former FINRA vice president and head of regional enforcement Daniel Nathan. “It goes beyond simple fines. It's more about investor protection.” The total amount of fines ordered by FINRA on its member firms in 2015 is projected to be $93.9 million, down from $134 million in 2014. That difference can be attributed in large part to a $43.5 million fine in December 2014 for cases centering on research analysts. Experts believe the FINRA fine level is on an upward trajectory despite the decline from 2014 to 2015. “Even though the total fines are far lower than last year, they are much higher than they had been during the [...]

By |January 7th, 2016|FINRA, Press Releases & News, SEC|
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FINRA Intends To Probe Brokerages’ Compliance Culture

FINRA intends to investigate whether complying with rules is part of brokerage firms' culture during its examinations this year. The regulatory authority announced on Tuesday that it will more formally scrutinize how firm culture affects compliance and risk management practices. “A firm's culture is both an input to and product of its supervisory system, including its approaches to identifying and managing conflicts of interest and ensuring the ethical treatment of customers,” FINRA said. “This means that firms should take visible actions that help mitigate conflicts of interest and promote the fair and ethical treatment of customers.” Other focus areas for FINRA exams include the management of conflicts of interest in the sale of proprietary products and products the firm is paid to sell, technology, anti-money laundering and firm liquidity. Among the cultural aspects FINRA will investigate are whether compliance is valued at the firm and violations are not tolerated, whether the firm aggressively targets potential compliance problems, whether senior management serves as good role [...]

By |January 5th, 2016|FINRA, Press Releases & News, SEC|
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FINRA Fines Barclays Capital $13.75M

FINRA ordered Barclays Capital, Inc. to pay over $10 million in restitution, including interest, to affected customers for mutual fund-related suitability violations. These suitability violations relate to an array of mutual fund transactions including mutual fund switches. Further, the firm failed to provide applicable breakpoint discounts to particular customers and was censured and fined $3.75 million. Broker-dealers have an obligation to ensure that any recommendation to switch mutual funds be evaluated with regard to the net investment advantage to the investor. FINRA noted that “switching among certain fund types may be difficult to justify if the financial gain or investment objective to be achieved by the switch is undermined by the transaction fees associated with the switch.” FINRA found that from January 2010 through June 2015, Barclays’ supervisory systems were insufficient to prevent unsuitable switching or to meet certain of the firm’s obligations regarding the sale of mutual funds to retail brokerage customers. In particular, the firm incorrectly defined a [...]

By |December 29th, 2015|FINRA, Press Releases & News|
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FINRA December 2015 Disciplinary Actions: Part III

Denny P. Darmodihardjo (Roswell, GA) submitted an AWC in which he was assessed a deferred fine of $25,000 and suspended from association with any FINRA member in any capacity for 18 months. FINRA found that he engaged in excessive and unsuitable trading in a customer’s accounts. The findings stated that Darmodihardjo made recommendations for the accounts of the customer who, at the time, was a retiree in his late seventies living on a fixed income and caring for his adult child. Darmodihardjo used this control to excessively trade the accounts in a manner that was inconsistent with the customer’s investment objectives, financial situation and needs. The findings also stated that Darmodihardjo recommended unsuitable short-selling and margin use in transactions for the same customer. Despite losses being incurred in the customer’s accounts, Darmodihardjo did not cease the active trading strategy. The suspension is in effect from October 19, 2015, through April 18, 2017. Anthony Clyde Gray (Baton Rouge, LA) submitted an AWC [...]

By |December 28th, 2015|FINRA, Fraud, Press Releases & News|
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