One of FINRA’s top priorities is to advance investor confidence in the securities markets through vigorous, fair and effective enforcement of FINRA and MSRB rules, and federal securities laws and rules. The Enforcement Department is tasked with investigating potential securities violations and, when warranted, bringing formal disciplinary actions against firms and their associated persons.
FINRA has the authority to fine, suspend or bar brokers and firms from the industry. Enforcement handles a broad range of investigations and cases. The department works closely with other FINRA departments and offices, such as Market Regulation and Member Regulation.
For instance, Enforcement collaborates with Member Regulation in investigating suspected rule violations found in the course of firm examinations, and in reviewing customer complaints. If warranted, Enforcement will take formal disciplinary action.
FINRA may initiate investigations from many varied sources, including examination findings, filings made with FINRA, customer complaints, anonymous tips, automated surveillance reports, and referrals from other regulators or other FINRA departments, among others.
FINRA can take disciplinary action through two separate procedures: a settlement or a formal complaint. With a settlement, a firm or broker can opt to settle with FINRA and sign an Accept, Waiver and Consent form (AWC).
A formal complaint is filed with and heard before FINRA’s Office of Hearing Officers. The office assigns to the case a professional hearing officer who is responsible for ensuring the complaint is resolved fairly and expeditiously. The case is heard by a three-person panel made up of the hearing officer and two industry panelists.
In 2014, FINRA brought 1,397 disciplinary actions against registered individuals and firms, and levied $134 million in fines. As a result, FINRA expelled 18 firms from the securities industry. We also suspended 5 firms and 705 brokers, as well as barring 481 individuals from associating with FINRA-regulated firms. In addition, FINRA ordered $32.3 million in restitution to harmed investors.
J. Bradley Bennett
Executive Vice President, Enforcement
These guidelines do not prescribe fixed sanctions for particularviolations. Rather, they provide direction for Adjudicators in imposing sanctions consistently and fairly.
FINRA takes disciplinary actions against firms and individuals for violations of FINRA rules; federal securities laws, rules, and regulations; and the rules of the Municipal Securities Rulemaking Board.