FINRA Books More Disciplinary Actions, But Fine Total Drops

In 2024, the Financial Industry Regulatory Authority increased the number of disciplinary actions and the amount of restitution payments to victims but collected less in fines, according to an annual analysis by Eversheds Sutherland LLP.

Eversheds Sutherland’s analysis, which is conducted by partners Brian Rubin and Adam Pollet, analyzes FINRA’s monthly disciplinary releases, press releases and online databases to develop a running annual tally of the firm’s actions.

FINRA, as the Washington, D.C.-based law firm noted in the report, has been under legal and political fire by financial firms and policymakers questioning the constitutionality of its standing as a disciplinary body in the financial industry. That push made further noise when the Heritage Foundation’s Project 2025 called for FINRA to be abolished.

Pollet wrote in the report that such a move is “highly unlikely” over the next four years, “even if litigants or politicians are successful in curtailing certain practices or having the SEC more closely supervised FINRA.”

Eversheds Sutherland also forecasted in the report that the number of enforcement actions by the SEC against brokers/dealers in the second Trump administration should decline, just as they did in the first. That, however, may lift enforcement on broker/dealers by FINRA.

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“Given the current political landscape under Trump’s second administration, it is likely we will see SEC enforcement slowdown [against broker/dealers], which may present opportunities for FINRA’s enforcement program to increase and fill gaps,” the firm wrote.

Disciplinary Actions

Rubin and Pollet’s 2024 analysis found a jump in disciplinary action from FINRA year-over-year, rising 23% from 552 disciplinary actions.

According to the report, the five costliest areas of enforcement by FINRA, which is supervised by the Securities and Exchange Commission, were:

Discipline for not accurately reporting trades or trade information, marking the fifth year of leading enforcement actions. FINRA called out 21 trade reporting infractions in 2024, totaling about $9 million in fines.
Spoofing cases, in which traders place an order with the intention of canceling to create the appearance of demand they then manipulate for their own advantage. While there were only two such disciplinary actions in 2024, they resulted in about $6 million in fines.
Options trading, which resulted in $4.3 million in fines. Some of the fines came from firms failing to detect customers with cash accounts who engaged in “free-riding,” or the buying and selling of securities before paying for them. Other actions came from firms not having “reasonably designed” systems to manage customers’ options trading.
Technological issues by which a system malfunction or human error led to a failure to comply with regulatory obligations led to $3.5 million in fines.
Discipline related to firms not correctly fingerprinting and doing background checks on non-registered employees led to fines of about $2.7 million.

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While disciplinary actions were up from 2023, they reflected a longer-term decline over the past decade. Eversheds Sutherland’s tracking showed that FINRA booked over 1,500 disciplinary actions in 2015, with the number declining over the years.

Restitution

According to the report, the amount of restitution paid to victims increased “substantially” year-over-year.

FINRA ordered restitution payments of about $23 million, up 207% from the $7.5 million in restitution ordered in 2023.

The jump was driven by FINRA calling for larger restitution payments of more than $1 million, including seven firms paying fines that totaled about $18 million. In 2023, FINRA ordered only one firm to pay a restitution of $1 million.