National Adjudicatory Council Enhances FINRA’s Sanction Guidelines
Revisions to the Sanction Guidelines Create New Fine Ranges Specific to Firm Sizes and Individuals, Reflect FINRA’s Enforcement Priorities
WASHINGTON—FINRA announced today that the National Adjudicatory Council (NAC) has made significant improvements to the Sanction Guidelines to ensure that they accurately reflect the levels of sanctions imposed in FINRA disciplinary proceedings and serve as an efficient resource for member firms, individuals and adjudicators.
The NAC is FINRA’s appellate tribunal for disciplinary cases and is composed of a total of 15 industry and non-industry members. It has primary responsibility for considering policies regarding disciplinary sanctions and has periodically revised the Sanction Guidelines since 1993. The Guidelines are intended to assist FINRA’s adjudicators—hearing panels and the NAC—in imposing a range of sanctions that are consistent and fair in disciplinary proceedings. The Guidelines provide firms and individuals with some of the typical securities rule violations and the ranges of disciplinary sanctions that may result from those violations. They also serve as a framework for settlement negotiations between FINRA’s Department of Enforcement and member firms or individuals.
“The changes to the Sanction Guidelines align the sanctions to where FINRA’s Enforcement program has evolved. The Sanction Guidelines also bolster FINRA’s mission of protecting investors by reflecting how grave violations of FINRA’s rule will result in serious sanctions,” said Jessica Hopper, Executive Vice President and Head of FINRA’s Department of Enforcement.
The revisions tailor sanctions to differentiate between types of respondents (individuals and firms by size) and modify the Sanction Guidelines primarily in the following ways:
- split each current guideline into separate guidelines for individuals and firms;
- create separate fine ranges for small and mid-size or large-size firms; and
- remove the upper limit of the fine ranges for mid-size and large-size firms for select guidelines.
“The improvements to the Sanction Guidelines address the more common violations committed by firms and individuals over the past years and underscore the seriousness of some violations. The NAC carefully considered the changes and agree that the recommendations should be tailored for individuals and different sizes of firms,” said Alan Lawhead, Associate General Counsel to the NAC.
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.