FINRA’s Top Five Fine Categories for 2021

Posted on March 28th, 2022 at 3:28 PM
FINRA’s Top Five Fine Categories for 2021

"From the Desk of Jim Eccleston at Eccleston Law:

The Financial Industry Regulatory Authority (FINRA) issued $91 million in fines in 2021, which constitutes a 60% increase from $57 million in 2020, according to ThinkAdvisor. The 2021 fine total is the highest since 2016 when FINRA imposed $174 million in fines. However, much of FINRA’s 2021 total constitutes Robinhood’s payment of $57 million in fines and $12.6 million in restitution relating to supervisory failures and investor harm. Here are FINRA’s top five fine categories in 2021: 

#5. Municipal Securities: In 2021, FINRA reported seven municipal securities cases, which totaled $3 million fines. While municipal securities have not appeared on the list since 2019, fines in this category increased from only $335,000 in 2020. 

#4. Trade Reporting: FINRA reported nine trade reporting cases, which resulted in $3.4 million in fines in 2021. The number of cases decreased by 74% while fines decreased by nearly 51%. In the largest 2021 case, FINRA fined a firm $2.6 million for inaccurately reporting over-the-counter (OTC) options positions to the Large Options Positions Reporting System. 

#3. Suitability: FINRA reported 54 suitability cases in 2021, which is an increase of 29% in comparison to 42 cases in 2020. Additionally, fines related to suitability jumped by 109% percent from $1.9 million in 2020 to $3.9 million in 2021. FINRA additionally ordered $7.3 million in restitution in suitability cases, which constitutes a decrease from the $9.9 million in 2020. 

#2. Unit Investment Trusts (UITs): In 2021, FINRA reported five UIT cases, which resulted in $3.9 million in fines and $10.9 million in restitution. UIT fines primarily were attributable to one case in which FINRA issued a $3.25 million fine relating to the firm’s failure to supervise early UIT rollovers, which caused clients to incur potentially excess sales charges. 

#1. Anit-Money Laundering (AML): FINRA reported 16 AML cases in 2021, which is an increase from 14 cases in 2020. Furthermore, FINRA issued $4.6 million in fines in 2021, compared to $16.2 million in 2020. AML remained in the top spot of the list for the sixth consecutive year primarily due to three large, six-figure settlements. In one case, FINRA fined a firm $650,000 and determined that the firm failed to monitor suspicious activity pertaining to low-price securities transactions. 

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


Tags: eccleston law, finra, fines

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