FINRA Reports $218 Million Net Loss in 2022; CEO Compensation Surges by 11.5%

Posted on July 11th, 2023 at 11:42 AM
FINRA Reports $218 Million Net Loss in 2022; CEO Compensation Surges by 11.5%

From the desk of Jim Eccleston at Eccleston Law 

According to its annual report, the Financial Industry Regulatory Authority (FINRA) reported a net loss of $218.1 million in 2022, compared to a net profit of $218.8 million in 2021.

The losses were primarily due to a $166.9 million loss in its investment portfolio and an anticipated $60.2 million operating loss. FINRA's revenues were affected by a decrease in public offerings and lower trading activity fees, while expenses increased due to technology investments and higher wages. FINRA's CEO and Chief Financial and Administrative Officer stated that the operating loss was expected and aligned with their strategic plan outlined in 2020.

According to AdvisorHub, FINRA executives have foreseen a situation where their expenses would outpace revenue growth. This is despite the approval of member fee
increases by the Securities and Exchange Commission in 2020, which are being implemented gradually over three years starting in 2022. To manage this situation,
FINRA is relying on its reserve portfolio to cover its costs.

According to the report, CEO Robert W. Cook and other senior executives saw their pay increase in 2022. Cook was paid $3.68 million, which marked an 11.5 percent rise from
the nearly $3.3 million he received in 2021. Additionally, FINRA’s expenditure on compensation and benefits amounted to $870 million in 2022, showing an 8 percent increase compared to $802.5 million in 2021.

Furthermore, FINRA’s workforce expanded by 6.5 percent in 2022, reaching a total headcount of 3,980 individuals. As per FINRA’s recently released annual budget, it is projected to further grow by 5.5 percent in 2023, reaching 4,200 employees. The budget report also highlighted that approximately 250 contractors and temporary employees have transitioned into full-time positions since 2019.

In addition, FINRA provided details on its enforcement activities, reporting a total of $54.5 million in fines imposed in the previous year, including $6.4 million in disgorgement. The May report disclosed that these funds were primarily allocated to support FINRA's efforts in enforcement and investor education.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

 

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