The U.S. Financial Industry Regulatory Authority has been bringing more disciplinary cases, and levying more fines, according to data compiled by a US law firm, Sutherland Asbill & Brennan LLP.
The firm reports that FINRA filed 1,488 disciplinary actions in 2011, up from the 1,310 cases it initiated in 2010. The sanctions handed down by self-regulatory organization have increased, too. The number of individuals barred by FINRA jumped from 288 in 2010 to 329 in 2011, and the value of fines increased by 51% to US$68 million from US$45 million in 2010.
This increase in fines is a significant reversal from 2010, when there was a US$5 million drop in the total amount of fines notwithstanding a 13% increase in the number of actions filed, the firm says. And, it notes that while the fine activity is still well below record levels (US$184 million in 2005), “it may signal continued enforcement efforts for the near future”.
According to the firm, the top enforcement issues for the past year were: advertising violations, which generated US$21.1 million in sanctions during the year, up from US$4.75 million in 2010; improper short selling cases, which accounted for US$16.8 million in fines; followed by cases involving auction rate securities; and, suitability cases, which resulted in US$7.7 million in reported fines in 2011.
The firm also observes that the number of fines in excess of US$1 million grew from just six in 2010 to 10 in 2011; and, more significantly, the total amount of these fines jumped from US$14.2 million in 2010 to more than US$35 million in 2011. “This includes five fines of at least US$3 million and a short selling case that resulted in a US$12 million fine,” it says.