In 2012, FINRA reported 1,541 disciplinary actions, which was a slight increase of 3.6% from the 1,488 cases the regulator initiated in 2011. Last year marked the fourth straight year of growth in the number of disciplinary actions. This continuous rise may indicate FINRA’s persistence to crack down on industry misconduct.
Fines in 2012 issued by FINRA totaled $78.2 million from the $68 million levied in 2011. Suitability violations were the top cause, followed by due diligence, research, advertising and ETF violations. The rise in suitability cases was mostly driven by the $7.5 million in fines assessed in four exchange-traded fund (ETF) cases, as well as “supersized” fines of $1 million or more in cases involving complex products like reverse convertible notes and unit investment trusts.
Due diligence fines totaled around $12.8 million with approximately 62 cases. Although the research report and research analysis cases dropped from 15 cases in 2011 to 13 in 2012, the total fines jumped from $1.5 million to $12.4 million. Next, advertising was the fourth-biggest fine generator in 2012 totaling $10.4 million with 50 reported cases. Lastly, ETF cases jumped from four to nine in 2012, which was an 125% increase and at a total of $123,000 in fines.
